Hey Guys,

As some of you know. U.S. hedge funds are very secretive about what they do. Also, almost ‘anyone’ can create one. Which has created a large amount of backlash. From the investment community, as a whole.

With hedge funds growing a huge amount of interest. Financial services are taking a piece of the pie. Moody’s Investor Service has created new ratings for hedge funds. The ratings are not based on investment strategies or portfolio risks. Since, hedge funds are not going to give out this information. The new ratings are based on ‘operational quality’.

Here is what Kathryn Kerle, vice president at Moody’s told Bloomberg about the new ratings. “These ratings are on the manager as opposed to the fund itself. Moody’s won’t rate the creditworthiness of hedge funds or the effectiveness of an investment strategy, she added.”

Moody’s will offer hedge funds a private rating. Before, they make the ratings public. This should intice fund managers to let Moody’s rate them. Of course, hedge funds can deny the ratings. Which wouldn’t let Moody’s publish the ratings and/or review their fund.

The ratings add little value to the largest hedge funds. Why would a huge hedge fund manager let Moody’s rate them? I can’t even think of a reason. I expect to see, growing and new hedge funds participate in the ratings. To have something to tell investors and grow. So, is this really going to help? They’re too many twists and directions to figure. It’s a step into the right direction, though.

Thanks for Visiting