WEST PALM BEACH, FL (HedgeCo.Net) – The growth of the hedge fund sector led to a significant increase in the number of hedge fund investors seeking investments in hedge fund vehicles. However, suchgrowth also means that the very best and most experienced managers cannot absorb more investors when their assets reach their projected levels. Consequently, such managers close their funds to newinvestors, who are turned down because their funds have reached their capacity.
According to Reuter�s news reports, new investors are hiring the services of middlemen to help then get into such closed funds. George Van, chairman of consulting company Van Hedge Fund Advisors said, “There is so much demand in this environment, but limited supply, and many good funds are closing to new investors at an unprecedented rate, for everyone, this means it is going to be much harder to find good funds.”
According to news reports, managers such as Elliott Management Corp, Cerberus Capital Management and King Street Advisors are turning away new investors. Other managers such as Maverick Capital and Caxton Associates have long stopped taking new money.
This decision to close funds when they reach their capacity is often made to protect the interest of investors in such strategies. Often when funds grow too big, it becomes more difficult to maintain such level of returns initially afforded to investors. Philippe Bonnefoy, head of Comas Management, an adviser to the alternative investment unit of Commerzbank Securities, said such tendency of utilizing middlemen to get into closed hedge funds will continue to grow in the near future.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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