Sure not – Hedge Funds are a long-term growth story and institutional assets continue to flow into Hedge Funds and especially Funds of Funds. It is estimated that Funds of Funds account for about 40to 50% of the Hedge Fund community�s total assets – expectations are for that percentage even to continue to increase over time. The landscape of the Hedge Fund Industry is going to change in thelong run. Though the number of Hedge Funds may increase in the short-term consolidations is expected to occur in the near future.

Oliver Prock, Managing Director of Salus Alpha, a Swiss Fund of Hedge Fund company, agrees with the trend forecasted by experts � �only Fund of Funds of a certain quantity and quality will survive. Salus Alpha has foreseen the trend and the need for consolidation some time ago. At the moment we are finalizing a take over of a Fund of Hedge Fund, others are to follow in the near future�, he noted.

Salus Alpha�s evaluation of the market situation is supported by a research carried out by business school Edhec. It shows that poor Hedge Fund performance last year and the growing risks of failure are forcing more managers to close shop or to consider joining forces with others in the industry. Edhec said big firms were buying smaller firms to gain capacity in the industry, while increased competition as the industry grows, and lower returns, are also putting pressure on fees which is encouraging consolidation.

Distribution will be one of the top topics in the future, favoring bigger Fund of Funds companies and leaving the smaller ones behind. The exponential growth seen in the hedge fund sector would sooner or later moderate. �This is just a normal scenario, happening in every line of business after some time. However if you �oversleep� the changes happening right now � especially if you are a small Fund of Funds company – you might find yourself in serious trouble� Mr. Prock said. He also added that Salus Alpha is closely watching smaller companies, that could be of interest as �take over candidates�.

The Hedge Fund industry saw a lot of money flowing in the previous years, nevertheless hundreds of Funds shut down, mainly because of poor performance. The industry will face a round of takeovers until the number of Funds is cut down to a reasonable amount, testifying Darwin�s theory that �only the strong survive�.

About Salus Alpha Salus Alpha is an alternative investment management company headquartered in Switzerland with subsidiaries in Austria and the USA. Since the formation in 2001, Salus Alpha has launched 4 funds namely: the Salus Alpha Global Fund, the Absolute Return S.A., the Absolute Return S.A. Institutional and the Salus Alpha Managed Futures. The company currently has more than � 150 million under management.

Hedge fund analysts at Salus Alpha gained long-time experience with investment banks in fund of hedge funds management, before joining Salus Alpha. The Salus Alpha investment process is based upon three equally important criteria: strategy allocation (Top Down), manager allocation (Bottom Up) and continuous monitoring (Risk Management).

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public.relations@salusalpha.com or:
Gudrun Knarr gudrun.knarr@salusalpha.com
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