In defense of hedge funds

Politics, finance, and social media collided in January of 2021. Retail investors quickly rallied together to undermine hedge funds, resulting in the now-infamous price spike for stocks such as GameStop and AMC. Policymakers responded with congressional hearings and numerous accusations, placing blame for the unusual stock activity on various parts of the market and our economy, including hedge funds. While the market events of January have certainly reverberated across Washington, D.C., they’ve badly misinformed the public on the role hedge funds play in our local and national economy.

Hedge funds are a critical component of our financial system, working to secure retirement goals and charitable benefits that thousands of Nevadans rely on. Pensions and nonprofits invest in hedge funds to solidify their financial future. Hedge funds support Nevada’s economy by using sophisticated research to grow investments over time. Our elected officials cannot take these tools away and harm Nevada as we emerge from an economic calamity.

For over 20 years, I have helped professionals and business owners with their financial and business planning using a holistic approach. In order to be fully holistic, I have to help my clients navigate the complex worlds of finance, investment, retirement and asset protection planning. My experience in this business has shown me how vital it is to plan for retirement. And while Nevada’s workers can save as much money as possible, it’s hedge funds that secure the savings for many of our state’s retirees. 

At least seven Nevada retirement plans, including the Southern Nevada Culinary and Bartenders Pension Plan, invest a combined $1.6 billion in hedge funds. Over time, hedge funds grow this investment for the plan participants, and they also protect it against adverse market conditions, ensuring the money stays as safe as possible. Without hedge funds the retirement plans of many Nevadans, including some of my clients, would be in jeopardy.

Nevadans should also know that hedge funds work on behalf of charities and nonprofits. Multiple Nevada-based nonprofits, including the Gabelli Foundation, invest a total $434 million in hedge funds. I’ve seen firsthand the enormous positive impact these organizations provide. My work with nonprofits serving the Asian community and empowering women business owners has shown me the value of the nonprofit space in developing communities, and I’m afraid of a possible future where hedge funds aren’t there to secure financial stability on behalf of these organizations. 

I understand our complex, interconnected economy can initially be difficult to grasp, but it’s imperative that those in power overcome the learning curve. Hedge funds, a critical component of our financial services system, actively work to improve the lives of those living in Nevada and throughout the country. Imposing unnecessary restrictions on them due to a fundamental misunderstanding of their role would be a catastrophic misstep. It’s not Wall Street that would suffer, but the livelihoods of some of Nevada’s most vulnerable. 

Jennie Kim, LUTCF, is a financial advisor with EmpowHer Planning. She lives in Las Vegas.