WEST PALM BEACH, FL (www.hedgeco.net) – Assets flowing into the hedge-fund industry may have contributed to the tough markets facing hedge fund managers today. According to Hennessee Group, hedgefund managers have generated double digit returns to its investors, eight times during the decade of the 1990�s. Hedge fund managed assets have since surpassed $1 trillion and growing, during theearly 1990�s, global hedge fund�s managed assets stood at about $40 billion.
The Hennessee Hedge Fund Index has currently grown to about 900 managers. The industry tracker currently oversees half of the capital in the industry, the index rose less than 9% in 2004.
Several hedge fund strategies may have suffered more from the weight of new assets flowing into hedge funds, than others. Such strategies as Arbitrage, which generally involves trading on price fluctuations and anomalies have particularly suffered from the new asset surges as many more managers continue to chase fewer and fewer arbitrage opportunities in the markets.
According to Hennessee Group, the Convertible strategy has returned more than 10 percent only one time during the past 5 years. Hennessee�s data shows that similar returns are also posted by other arbitrage related strategies. Charles Gradante, managing principal of Hennessee, said, �This is an evolutionary process that’s accentuated by several factors, one of which is the huge inflow of money into hedge funds.”
The heavy cash at hand has enabled hedge fund managers to dive into other strategies such as private equity, emissions trading, reinsurance businesses, and still evolving new trading strategies such as energy trading. According to Hennessee Group, the number of hedge fund managers lending money to small companies has increased recently. Experts believe that such activities and ventures are efforts by hedge fund managers to continue to deliver absolute returns to its investors giving the current tough market conditions.
Some experts believe this trend fits hedge funds methods of doing business, and such patterns were also observed in the early days of hedge funds. Jeff Joseph, managing director at Rydex Capital Partners said, “This is d�j� vu all over again, Hedge-fund managers have always looked for new opportunities,� he explained. As more trading opportunities dry-up, hedge fund managers will continually seek alternative avenues to generate returns to its investors, and the search for such opportunities will likely intensify in the coming years.
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 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.
