G8 set to investigate hedge funds

There is concern about hedge funds' power over the markets

The G8 group of the eight leading industrialised nations is to study whether hedge funds pose a risk to their economies, Germany has said.

With Germany set to take over the presidency of the G8 next year, it wants a study into whether hedge funds are "insufficiently transparent".

Having grown in both popularity and clout in recent years, hedge funds are lightly-regulated investment schemes.

Both high return and high risk, they are popular with wealthy investors.

'Systemic risks'

Germany's Deputy Finance Minister Thomas Mirow said the G8 needed to try to reduce any risk from hedge funds.

"What we would like to know is are there systemic risks, yes or no, and if so, what could we do to deal with it in a reasonable manner," he said.

According to estimates, hedge funds have doubled their assets in the US alone to more than $1.3 trillion (£662bn) over the past five years.

The US financial watchdog, the Securities and Exchange Commission, said earlier this year that it was pushing for tougher regulation of the hedge fund industry.