Fund managers: Fundamental fears

Posted: August 1, 2014 in economy
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UK Only Article: 
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Winning the battle, losing the war

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Fund managers


Regulators should avoid tightening the rules on the fund-management industry

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WHERE will the next financial crisis occur? Not, almost certainly, where the last one did. Since the late 1990s, the world has coped with economic meltdown in South-East Asia, the dotcom boom and bust, and the American housing bubble and subsequent banking collapse. The place that regulators are worried about now is the fund-management industry.
In a sense, their worries are the result of the regulatory response to the last crisis. Banks now have to hold more capital than before, so they are less willing to lend money to companies or to act as marketmakers in the corporate-bond market, and companies are now more dependent on the bond markets (and thus asset managers) for finance. Investors have piled into corporate bonds, not least because central-bank policy has pushed down …

via Economic Crisis


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