– Economic Times [ WEDNESDAY, SEPTEMBER 28, 2005 01:36:19 AM] These days there are regular media reports on the viability of hedge funds to produce above marketreturns given recent lower returns. Investors in hedge funds no doubt are paying attention to what has been a less than stellar year for hedge funds. Hedge funds are up a little over 5 per cent (onan average) this year which is better than most US indices but beating average mutual funds by a smaller factor than what is come to be expected of hedge funds.
Speculation is rife as some large hedge funds that were once closed to investors have opened to new money recently including the $6.5 b SAC Capital, the $13 bn Caxton Associates and RenaissanceTechnologies. Renaissance Technologies founded by James Simons, a former math professor, and long closed to investors raised eyebrows by its claim that it could mange up to $100 bn in its new fund.Citadel, the Chicago-based $12-bn fund was rumoured to be considering an IPO.
There was also some reports that such plans were partly a result of some senior fund managers leaving the firm as they felt the best years of the firm were behind them. The carrot of IPOgains could retain senior staff it was believed. Given the above, it is little wonder that questions are raised regarding the motivation behind raising new capital at this time. Are hedge fundmanagers seeing more opportunities in the capital markets or as some are pontificating are they raising capital to keep their revenue numbers steady as returns decrease?
