One Step Ahead: Private Equity and Hedge Funds After the Global Financial Crisis

One Step Ahead: Private Equity and Hedge Funds After the Global Financial Crisis

by Timothy Spangler
     
 

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As the recession stutters onwards systemic and structural causes for the financial crash continue to dominate international news and debate. Never has there been such an appetite and desire to understand the financial institutions that govern us. But despite public interest, alternative investment vehicles such as private equity and hedge funds remain elusive.… See more details below

Overview


As the recession stutters onwards systemic and structural causes for the financial crash continue to dominate international news and debate. Never has there been such an appetite and desire to understand the financial institutions that govern us. But despite public interest, alternative investment vehicles such as private equity and hedge funds remain elusive. Both have always had a unique position in the market, designed as they are to function outside of the rules that govern other financial organizations. But what is it that they do and — significantly — how is it that they have prospered since the 2008 meltdown despite the introduction of new regulatory regimes?

In this accessible and timely study, award-winning writer Timothy Spangler explores how the structures of alternative investment funds enable them to adapt and react to global financial conditions. From start-ups to complex venture capital firms,One Step Ahead is the essential guide to understanding how alternative funds operate, drive economic growth, and have become essential vehicles for investment for both public and private sectors the world over.

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Editorial Reviews

Publishers Weekly
12/02/2013
In his first book, UCLA Law professor Spangler offers an informative overview of alternative investments while taking a critical look at the industry. Dense but readable, the book will demystify unregulated investments and provide a helpful examination of fund structures and a detailed breakdown of their operations. Spangler reviews the role of private equity and hedge funds in the recent financial crisis but does not blame them for the economic crash. Despite considerable mention of such high-profile alternative investment managers as Steve Cohen, Henry Kravis, and George Soros, he also recognizes their contributions to society. Though he acknowledges that the SEC has its "shortcomings," he maintains that fraud is not exclusive to this industry. Readers hoping for an indictment of alternative investments will be disappointed. While the book's appeal may be limited to readers interested in investment management or global finance, that target market is sure to find this a comprehensive guide to a portion of the industry often neglected by other business titles. (Sept.)
From the Publisher

"Chock full of well-researched information and detail" - Financial Times

"Private equity and hedge funds have become an important part of a sound investment strategy, but recent high-profile frauds and the global financial crisis have exposed the risk they pose to the uninformed investor. In this detailed guide to how these alternative investment funds work, commentator and blogger Spangler (partner & chair, investment funds, Kaye Scholer LLP; Law of the Market blog) balances dense financial information on the creation and regulation of this sector of the market with wit and anecdotes from popular culture. The first five chapters outline how these funds work, who manages them and why, and how most of their capital comes from pensions and university endowments. After explaining the basics of fund creation and management, Spangler dedicates the following four chapters to a current outlook on these investments in the financial climate of today and the complicated relationship among the firms that manage the funds, politicians, and government regulators. The book ends with a look at how these funds work within a global network. VERDICT This detailed outline of how private equity and hedge funds function will appeal to an audience already familiar with the basics of financial investment. Recommended."— John Rodzvilla, Emerson Coll., Boston, Library Journal

"An informative examination of a niche market facing significant change." - Kirkus Reviews

"The economic collapse made it absolutely clear that something had gone terribly wrong in America's financial sector. It was much less clear what the problem was: Most of the demands of Occupy Wall Street had nothing to do with Wall Street, and the average person on the street couldn't tell you how finance worked, much less how to fix it. In ONE STEP AHEAD, Timothy Spangler steps into the breach, offering a brief, readable explanation of how private equity and hedge funds operate and what purpose they serve in the economy, and evaluating suggestions as to how they might be improved. This is a book for people looking for deep understanding and careful analysis, rather than empty sloganeering -- and yet it will be immediately accessible to the average reader, which is a remarkable accomplishment."
Robert VerBruggen, National Review

"Finally a book that sheds a knowledgeable light on the private equity and hedge fund worlds. Long demonized by the media, Timothy Spangler has humanized these often secretive industry sectors all the while revealing just how essential they are for nursing sick companies back to health and bringing rationality to markets. If we didn't have private equity funds and hedge funds, we'd have to invent them. Thanks to Spangler for making this more apparent in a very readable way."
John Tamny, editor of Forbes Opinions and RealClearMarkets.com

"Bringing shadow banking out of the shadows, ONE STEP AHEAD sheds light on alternative investments funds and their role in the economy. Spangler, who understands the nuts and bolts of hedge funds and private equity in the US and European contexts, gives the general public knowledge, which is power, to grasp their role in our economic future. The lines that distinguish one alternative investment fund from another are anything but bright. ONE STEP AHEAD identifies some growing trends among hedge funds and private equity funds and the regulatory hurdles ahead for such funds due to new legislation, and outlines why we should care. ONE STEP AHEAD documents the changes for both private equity and hedge funds resulting from Dodd-Frank. Spangler questions whether the global nature of these funds is more complex than our policy fixes and whether our regulatory oversight bodies will ever by foresightful enough to prevent future calamity."
Noreen Clancy, RAND Corporation

"Like a series of exceptional New Yorker articles, ONE STEP AHEAD provides a detailed and engaging insider's view of the seemingly-secret world of alternatives from every perspective - birth to death, rumor and myth to simple truths, and whys and wherefores. Practitioners and investors alike should get their hands on this book ASAP."
Karyn Polak, Chief Counsel -Wealth Management, PNC Financial Services

"ONE STEP AHEAD opens up the opaque world of hedge and private equity funds with precision in an accessible way for the non-specialist. Complex technical issues are conveyed concisely but never over- simplified. The dialogue opens up the dry world of financial regulation acknowledging concerns mounted toward hedge funds and private equity funds since the financial crisis to present a balanced view of how private equity and hedge funds add value to the financial system. Timothy Spangler's ONE STEP AHEAD offers useful insight into how best to ensure that society, and ultimately taxpayers, gain the most from hedge fund and private equity activities by the rules set up and policed by the regulatory authorities. A fascinating read and some surprising, sometimes shocking, conclusions."
Giles Adu, Managing Partner, Brook Street Partners

"ONE STEP AHEAD gives a clear, practical and realistic insight into the private equity industry today, in contrast to the pre-conceptions, clichés and ‘sound-bites’ about private equity that have been sensationalized in the popular press. As regulators and public opinion continue down a path of promoting further restrictions to private equity, this book provides an important voice in seeking to balance the political debate where the industry itself has struggled to do so."
Aristide Stavropoulos, Ridgeway Capital LLP

"When so much of the debate around our financial system is clouded in misunderstanding, it is refreshing to read such an engaging and accessible account as ONE STEP AHEAD. By setting out the facts clearly and cleanly, Timothy Spangler goes beyond the jargon and the headlines to give readers an accurate portrayal of the role of private equity and hedge funds in modern capitalism."
Mark Florman, Chief Executive Officer, British Private Equity and Venture Capital Association (BVCA)

"ONE STEP AHEAD expertly combines an insider's understanding of behind-closed-doors industry dynamics with an everyman's ability to tell the story in a way that a Main Street reader will understand and appreciate. By focusing on the 'pointy end' of modern capitalism, Spangler tells a tale that is relevant and educational to us all."
Robert Diamond, Fernbrook Partners

"The ravages of the financial crisis, and the bruising Presidential campaign in 2012 for which it served as backdrop, have catapulted the alternative investments industry into the public consciousness. Spangler provides a comprehensive account of the issues surrounding the industry, invaluable to anyone wanting to cut through the political point scoring and amorphous resentment that have charactersised the debate to date."
Solomon Teague, freelance financial journalist

"Hedge funds are being punished, and private equity is getting abuse, for things they did not do – merely because the politicians do not understand them. ONE STEP AHEAD explains in simple language what hedge funds and private equity are all about – and why they should be left alone to manage wealth and create wider prosperity."
Eamonn Butler, Director, Adam Smith Institute

"Timothy Spangler gives us a very readable introduction to the nuances of international finance and its key personalities. If you think you don't have a stake in this world; think again. Anyone with a pension plan should pay attention since it's your money these people are gambling with."
Roger Farmer, Department of Economics, University of California Los Angeles

"A lucid, inside account of how hedge and private equity funds work and their economic and social utility, with wider reflections upon the context of the political economy. A demystifying read for the intelligent layman."
Dr Iris H Chiu, University College London, Faculty of Law

"With its balanced and informed perspective, ONE STEP AHEAD proves that you do not need to be a financial whiz in order to understand how alternative investment funds work, what role they play in the financial markets and whether they are good, bad or indifferent. A must read for those who want to cut through the hype and get to the real issues."
Andrew Godwin, Director of Banking and Finance, University of Melbourne School of Law

Library Journal
09/15/2013
Private equity and hedge funds have become an important part of a sound investment strategy, but recent high-profile frauds and the global financial crisis have exposed the risk they pose to the uninformed investor. In this detailed guide to how these alternative investment funds work, commentator and blogger Spangler (partner & chair, investment funds, Kaye Scholer LLP; Law of the Market blog) balances dense financial information on the creation and regulation of this sector of the market with wit and anecdotes from popular culture. The first five chapters outline how these funds work, who manages them and why, and how most of their capital comes from pensions and university endowments. After explaining the basics of fund creation and management, Spangler dedicates the following four chapters to a current outlook on these investments in the financial climate of today and the complicated relationship among the firms that manage the funds, politicians, and government regulators. The book ends with a look at how these funds work within a global network. VERDICT This detailed outline of how private equity and hedge funds function will appeal to an audience already familiar with the basics of financial investment. Recommended.—John Rodzvilla, Emerson Coll., Boston
Kirkus Reviews
2013-10-01
Forbes.com "Law of the Market" blogger Spangler (The Law of Private Investment Funds, 2012, etc.) looks at hedge and private equity funds, which he believes will continue to have a function going forward. The author brings his legal expertise to bear on the many questions surrounding the structures of hedge and equity funds. Aware of ever-louder criticism and divided opinions, Spangler seeks to counter the "many misconceptions and biases" in the mainstream media. He believes that there is a function for financial organizations committed to pursuing higher returns for their investors by taking on higher risks. Hedge funds and private equity funds fill that slot. The author also looks at the darker side of the issue. Hedge funds, he shows, are now shored up by deposits from public pension plans, which chase the higher returns meant for their investors. Spangler reports that "many observers inexperienced with alternative funds are often quite surprised" to learn that many states are entrusting their retirement funds to these financial highfliers. Of course, other investors include those with enough income and assets to "fend for themselves," and regulators have turned their attention in that direction as well--e.g., the investors caught in Bernie Madoff's pyramid scam. Spangler discusses how hedge and equity funds are created and the processes by which their managers are empowered and protected from liability, while ensuring that their fees are paid. He also examines the tax advantages of the structures, especially the benefits of moving assets offshore. According to the author, President Barack Obama's proposals to change these types of tax breaks can be compared "to Hitler's 1939 invasion of Poland." Ultimately, whether such funds really outperform others remains unclear. An informative examination of a niche market facing significant change.

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Product Details

ISBN-13:
9781780742953
Publisher:
Oneworld Publications
Publication date:
09/24/2013
Pages:
352
Sales rank:
444,008
Product dimensions:
6.10(w) x 9.30(h) x 1.40(d)

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