OUTSPOKEN hedge fund manager Hugh Hendry has warned smaller companies will flee the EU if Brussels strangles the financial sector by excessively tightening regulation.
Hendry told City A.M. Europe was “fiddling” with hedge funds through tools such as the Alternative Investment Fund Managers directive, which would impose strict capital and liquidity requirements.
He said: “There is a wave of additional regulation and it has a cost associated with it, which is a burden to small businesses. If that becomes too much of a burden we would have to relocate out of the EU.”
His comments came after his firm, Eclectica Asset Management, filed accounts showing a trebling of profits to £8.5m in the 2008/9 year. The figure reflects strong performance at the height of the financial crisis, when Hendry’s flagship macro fund gained 50 per cent in October alone.
Year to date the fund is up eight per cent, with $60m (£38.8m) net inflows since December. Hendry said: “Our portfolios are structured around a deflationary thesis. There is too much debt in the world.”