MFA Reviews Role of Alternative Investments in the Capital Markets Since Dodd-Frank

MFA published a position paper titled "Dodd-Frank at 5: The Role of Alternative Investments in Today's Capital Markets." The paper discusses changes in the financial markets since the enactment of the Dodd-Frank Act, and examines the expanded role of alternative investments at the onset of new regulations.

In the position paper, MFA argues that hedge funds are no longer mere "tools for high-net worth individuals," and notes that institutional investors currently represent nearly two-thirds of the industry's assets under management. Moreover, MFA contends, as new regulations constrained the lending capabilities of banks, hedge funds "stepped in" to provide capital for local communities and businesses.

The paper highlights FSOC commentary that "asset management firms and investment vehicles have closed without presenting a threat to financial stability." Agreeing with FSOC, MFA stresses that by its very nature, the investment industry does not pose any systemic risk due to small market size, diverse investment strategies, small amounts of leverage and minimal concentration.

See: MFA Paper: Dodd-Frank at 5: The Role of Alternative Investments in Today's Capital Markets.