Letter - Hedge funds should be ready for scrutiny

As private equity reels from public attacks and tries to protect its reputation, hedge funds would do well to prepare for similar scrutiny.

The secrecy and misunderstanding surrounding hedge funds mirrors that of private equity, therefore it may not be long before they are forced into the same intense media spotlight.

So far, the levels of interest in the sector have yet to reach a crisis point. However, Bear Stearns' recent admission that two of its hedge funds are now virtually worthless could be a sign of serious trouble ahead.

As with private equity, hedge funds have a positive story to tell, but they need to start communicating this more effectively - and sooner rather than later.

Tom Coombes, CEO, Cognito.

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