To Hedge Fund or Not to Hedge Fund

Nearly 300 new hedge funds opened their doors for business in the first quarter of 2011. This is the largest number of hedge fund launches since before the financial crisis, performance and asset tracker Hedge Fund Research reports.

Though it is getting easier than ever to open a hedge fund, it is becoming tougher and tougher to keep the lights on. From January-March of this year, 181 hedge funds went out of business, the highest level of liquidations since the first quarter of 2010. In the same quarter a year earlier, 240 funds shut down, while 158 closed during the fourth quarter of 2010.

It is interesting to see how things change in terms of perception and the HF industry is no different. Going back further than half a decade ago, anyone and everyone on Wall Street wanted to be a Hedge Fund guy. Today, you hear very little talk about it. Hedge funds have arguably become even more secretive than they originally were. This is like going from lurking in the shadows to living in an underground tunnel.

I am interested in why the discussion about this career path has died down (at least on WSO). If I were to take an industry pulse off simply this website, I would be left feeling strongly that young Wall Street guys have a lot less interest in the HF game than previous generations did.

Would I be correct in making this presumption? Have you guys been bitten by the bad rap many HFs have gotten lately? Is the higher likelihood of hedge fund failure coming into direct conflict with your own risk aversions? Or are hedge funds, perhaps just going out of style?

Once the rock stars of the street, hedge fund guys and gals have seemingly gone silent. Where are they? Why are they so quiet? Will they come back with a bang? Or have they gone out with a whimper?

 

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-- "Those who say don't know, and those who know don't say."
 

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