WEST PALM BEACH, FL (HedgeCo.Net) – J.P. Morgan Chase & Co. has announced plans to increase its offerings of hedge fund products to investors. This is the latest effort by Wall Street to get apiece of the pie in the growing hedge fund industry. J.P.Morgan is buying a majority stake in Highbridge Capital Management, a hedge fund management firm offering multi-strategy hedge fund products.
Another manager, Citigroup, is developing a multi-strategy hedge fund management group. According to published reports, Citigroup has hired a staff of 15 veteran hedge fund managers to run its hedge fund portfolios that have been seeded with about $2 billion. With superior marketing channels and contacts, Citigroup may attract significant institutional investors and its hedge fund management obligations are projected to reach $10 billion over the next several years.
Some hedge fund market analysts think this is the beginning of a new trend, and expect many more traditional Wall Street money managers to join the hedge fund bandwagon. Industry watchers think the Highbridge acquisition will offer significant advantages and potentials to J.P.Morgan for expansion through its vast marketing outlets and channels.
Other traditional money managers such as UBS, Deutsche Bank and Morgan Stanley have already implemented their hedge fund management portfolios. One issue that has often been mentioned is how the entry of such large-scale money managers will impact the larger hedge fund management industry?
Michael Napoli, a senior managing director at Wilshire Associates, is concerned that such trend may affect capacity constraints, where too many funds are chasing fewer opportunities. Napoli said, “My main concern is that this is going to cause capacity problems. Hedge funds typically close up if they reach a level where they feel they can’t be successful�.
Others think such trend will help to legitimize hedge fund trading strategies and will help to significantly increase total hedge fund assets from its current $1 trillion mark.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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