WEST PALM BEACH, FL (HEDGECO.NET) – The growing asset management business of hedge funds may benefit Wall Street brokerages. These companies expect to gain a larger portion of profits arising fromtheir increasing services to the hedge fund industry, however some executives of the brokerage firms think there may be some bumps along the way before such goals are achieved.
There are published reports showing that many large US brokerage companies are quietly expanding their units in preparation for the anticipated growth in hedge fund business. This may arise from new investment money coming from public pension funds as well as endowments. According to Charles Gradante, a managing principal at Hennessee Group hedge fund advisory firm, pension funds and endowment funds will likely replace wealthy individuals as the major source of hedge fund investment assets. Recently, the largest pension fund manager in the Unites States, CalPers announced that it may double its hedge fund portfolio to $2 billion. CalPers currently has $1 billion invested with hedge fund managers.
Brad Hintz, a senior banking analyst with Bernstein Research told attendees at the recent Reuters Finance Summit, that “Prime brokerage is now the next thing they (Wall Street) are chasing,” according to Hintz, Morgan Stanley, Goldman Sachs Group and Bear Stearns Cos., together service almost three-quarters of the hedge funds. This scenario will make it more difficult for new and smaller brokerage firms to compete for such business.
However there are other formidable rivals currently repositioning their brokerage units to get a piece of the new hedge fund generated business. These rivals include UBS AG Lehman Brothers Holdings, Merrill Lynch & Co. and Citigroup Inc, according to analysts.
Hedge fund total assets under management continue to experience exponential growth from one year to another. In fact, the total assets managed by hedge funds have doubled in the past four years. Currently global hedge funds manage over $1 trillion in assets, and this number may triple in the next ten years according to market watchers.
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.
