The hedge fund industry is facing a renewed wave of unwarranted criticism at a time when many hedge fund managers are doing what they set out to do û to deliver absolute returns to their investors during extreme market volatility and falling asset prices, according to the Alternative Investment Management Association (Aima).

Aima, a global hedge fund industry organisation, believes the very practices recognised in the past as being part of the innovative nature of asset management û such as shorting, which is an accepted hedging and risk management practice û are now being singled out for unwarranted criticism.

Hedge funds should be recognised for what they are: investment funds that offer investors access to a wide range of asset and investment strategies, which can offer downside protection in difficult market conditions, Aima says.

These funds play a productive and liquidity-providing role across a range of markets, and are often the pioneers in new areas of finance which would not grow and flourish without them, the organisation adds.

Florence Lombard, London-based chief executive of Aima, notes that hedge funds are already considered part of the mainstream of the asset management industry. They are widely recognised as productive investment vehicles by investors, including pension funds, and have an important role to play in the current market, she says.

ôDisappointingly, hedge funds are often made the focus of media attention when any suspicions of market irregularities arise,ö Lombard says. ôIt is vital that the legitimate shorting of assets should not be confused with alleged market abuse by, as yet, unidentified players in the market.ö

Hedge funds have been blamed in part for the US-led credit crisis when it began last year, but developments have indicated that the causes of current difficulties in global capital markets lie at a fundamental level elsewhere, she says.

Hedge funds, if viewed as a single asset class, have preserved capital over the past 12 months while global equities have fallen by more than 10%, according to Aima.

Aima has 1,300 corporate members worldwide, based in 49 countries. Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and fund administrators.