WEST PALM BEACH, FL (www.hedgeco.net) – A new study conducted by Hennessee Group LLC, showed that only 5.3 percent of hedge funds failed in 2004. That number remains in line with the average failuresfor hedge funds in the past six years. Only 4.96% of hedge funds failed on the average over the past six years.
The Hennessee study focused on hedge funds managing over $10 million of investor assets, which liquidated due to poor performance, or manager retirement, or career change, according to Hennessee Group’s managing principal, Charles Gradante. He said, “This finding is at odds with speculation that hedge funds have a 15% failure rate with many entering and exiting the marketplace due to low barriers to entry, followed by liquidation due to poor performance.�
The study included a total of 800 managers, drawn from the Hennessee Hedge fund index according to the report. Gradante added, “This is a significant sample and I think the rate can be extrapolated across the whole industry – it’s good news and will hopefully redirect attention away from the gainsayers.�
Whether such study may reassure hedge fund critics who continue to suggest that a hedge fund bubble is likely, remains to be seen. Last week, the US Securities and Exchange Chairman William Donaldson told a Reuters news correspondent in an interview in Davos Switzerland, that the SEC must be ready for a fund financial crisis if necessary. {Hedgeco.net Previous Story} Donaldson said, “There is no way we cannot take a look at a $1 trillion industry, two years down the pike when something blows up, and it surely will, the SEC would be really nailed for not being on top of this.�
Hedge funds continue to grow amidst all such doomsday suggestions. In 2004, global hedge funds added about $79.6 billion to its investor-managed assets.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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