On the one hand, one would think the UN would be thrilled that hedge funds and private equity funds are main players in cross-border investments. On the other, it may not be as good as it looks. The United Nations Commission for Trade found, for example, that p.e. funds raised an estimated $260 billion last year, with half of it going to investments outside their home country. Likewise, hedge funds have been becoming more active in foreign investment and together with private equity represented $135 billion in cross-border M&A activity. So, what can be bad with that? According to UNCTAD, the problem is the reputation of HFs and p.e. funds, the former traditionally in for the short term, and the latter often staying around for five to seven years, but also increasingly looking for a quick flip. UNCTAD is concerned that because these sectors are not in for the long haul, they may ultimately have a negative impact on the countries in which they invest. The growing HF and p.e. activity in M&A, says the report, “raises questions about the implications of such investments for the long-term growth and welfare of the host economies.” Incidentally, hedge funds and private equity funds put 59% of their money in services and 40% in manufacturing, according to the report.
