Future for Hedge Funds?
IB
Tags:
(Baboon, 108
Points)
on 7/16/09 at 11:51pm
I recently stumbled upon an article that was particularly harsh on the history of hedge funds in the past and pessimistic about their future.
As someone who has long been enthralled by hedge funds and professional investing, the article was a bit disheartening.
Do most people now think that a sort of bubble has burst in the hf industry? Can anyone who is actually in the industry tell me the general consensus in Wall Street?
the article is here:






why are you worried about
some unknown blogger who does not even identify themselves? they don't put down much fact mainly unproven theories about things they may not even have any expertise in understanding..
there is definitely a bubble in hedge funds, but it does not mean there is not a future for the industry.
what are you worried about exactly?
I'm more inclined to believe these guys
http://www.reuters.com/article/businessNews/idUSTR...
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The WSO Guide to Understanding TARP
Like any other profitable
Like any other profitable industry, a flood of new entrants came onto the scene, including those who really didn't belong in it. They prospered so long as the markets remained positive.
As a result of the last few years' events, the unprofitable ones will close up shop, and the profitable ones will remain. Hedge funds are not as mysterious as they seem...it's just like any other business.
I'm more inclined to agree with the article that more investor money may go into hedge funds as time goes on and markets recover. After a while, return on capital overrides the need for return of capital.
Give it time
I remember when hedge funds were "the investment vehicles for the rich" which was supposed to be exclusive and had great returns.
Peasants thought "why can't I have a piece of that action?"
Pension fund money was put into them, they were made almost into de facto mutual funds and anybody who didn't have money in there was a retarded gimp...with fewer regulations the hedge fund managers could make money they way Peter Lynch, Suzie Orman, and Jim Cramer could only dream of...
Then quite a few imploded..."Uncle Sam, Why the FUCK did I lose money in this game?!? Why The FUCK are these not as regulated as mutual funds?!?"
And here we are, one CDO/credit crash later...
As an intern in a large fund
As an intern in a large fund of hedge funds group, I can tell you that hedge funds aren't going anywhere. Sure, there were a lot of redemptions this past year and the crappy funds with poor risk management collapsed. If anything, the crash just reminded existing funds of proper risk management and portfolio allocation. There are still new funds opening up shop now, and there are often funds shutting down.
I think it's a misconception to think that the hedge fund industry will be dead. A hedge fund is simply a large investment pool with professionals making investments in different asset classes. As long as the stock markets, bond markets, etc. exist, hedge funds will remain.
http://www.ft.com/cms/s/0/a1e
http://www.ft.com/cms/s/0/a1e5e912-75ef-11de-84c7-...
Not Going Anywhere - Just the Name
Hedge funds are absolutely not going away. However, look for the term "hedge fund" to become slightly less prevalent as the negative connotations of the last few years do not encourage managers to use that term boastfully. In fact, the same guys that used to tell all the "laypeople" they were hedge fund managers now say "alternative asset managers". Both terms have been around for awhile, but the latter is more inoquous.
There may be some consolidation in terms of the number of funds over the next several years, but AUM should probably remain relatively steady (and of course increase with a positive correlation to the equity/commodity markets).