WEST PALM BEACH,FL (HedgeCo.Net) – A new study conducted by JP Morgan has raised concerns on the declining hedge fund returns. The study warns that hedge fund returns will erode further if fundcompanies fail to modify their investment strategies. According to Jan Loeys, the head of JP Morgan�s market strategy and the leader of the study, many hedge funds have succeeded to the point that�pricing has adapted to their activities� making it harder for them to attain higher returns.

The study however, did not paint a pessimistic view for the future of hedge funds. It said, “it is probably too early to write off hedge funds”, but nonetheless, it raises concerns about their future chances if they fail to alter their tactics, focusing more on strategies where they hold advantages.

The study also stated, “Hedge funds are more effective tactical risk-takers than most other asset managers because they are much more specialized; they are subject to fewer restrictions and constraints; and they have been able to ride the wave of product innovation in the financial industry.”

According to Mr. Loeys, hedge funds should avoid strategies used by many investors and must develop a proprietary method of research enabling them to apply superior analytical research methods in their evaluation of trading situations. As an increasing number of new hedge funds hit the market, trading opportunities have dwindled at the same time. Today there are estimates of over 8,000 hedge funds, managing over $1 trillion in investor assets.

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

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WEST PALM BEACH, FL (HedgeCo.Net) – The International Monetary Fund [IMF] has warned that activities of hedge funds help to destabilize the global equity markets. The warning was released in acommuniqu� issued at the end of the recent biannual meeting of the world body�s policy-making committee, under the chairmanship of Mr. Gordon Brown.

According to the details of the communiqu�, hedge fund�s increasing search for alpha could help to undermine the global markets; such development would further erode the chances for growth in the global economy. The communiqu�, called on hedge fund companies to increase transparency and disclosure. It stated, �Improving transparency in markets, including the role of hedge funds, would help strengthen market surveillance, we still do not know what we do not know about hedge funds, and efforts to improve our surveillance and understanding of their market activities should be supported,” it added.

The world body is also concerned that another situation similar to the Long Term Capital Management collapse may still unfold. This statement was made prior to the biannual meeting. The agency once again called on China to release the artificial peg on its currency by allowing the renminbi, to float.

Obviously the IMF was addressing the recent spikes in commodity prices, particularly crude oil. Some have charged that hedge fund�s speculative activity in oil has helped to push prices above the $50 dollar range. Oil prices may still spike higher if such speculation by hedge funds continues. Lack of volatility in the equity markets has generated the interest of many hedge funds in the unstable oil prices. Such volatility resulted from uncertainties in the global oil supply due to production difficulties in many regions of the world where crude oil is produced.

IMF said, “This is not the time for complacency, oil prices are high and remain a risk. So first, we call on oil producers to provide adequate supplies to ensure that prices moderate.”

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

HedgeCo.Net is the most popular hedge fund database and community in the world. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!

Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com.