WEST PALM BEACH, FL (www.hedgeco.net) – A new study has shown that fewer number of investment asset managers now see hedge funds as a threat; the number of managers who still consider hedge funds athreat continues to decline when compared to the result from 2004. In a study conducted by Morningstar, the result shows that 45 percent of the polled managers expect hedge funds to take a slice fromtheir market share. In a similar study conducted in 2004, 60 percent of the managers in the poll think hedge funds are a threat to their operations.

Hedge funds use specialized trading strategies such as short-selling or complicated arbitrage techniques to trade in the markets. Hedge fund returns have dropped in 2004, and so far in 2005, the results have been lackluster, but analysts also think the next two quarters may be more positive for hedge funds. New reports show that the weak performance results and willingness of asset managers has forced some to establish their own in-house hedge fund operations in the first place. A Morningstar spokeswoman said, “It is partly to do with the fact that (hedge fund) performance has not been so great and that traditional funds have got into the hedge fund act.�

The new study also shows that more fund managers are in the process of establishing their own hedge fund operation in the coming year. The number of those firms planning to roll out their own hedge funds is greater in 2005, when compared with 2004. The new study polled a total of 39 European fund management organizations such group altogether manages over $2.2 trillion in total investment assets.

Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net

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