Times Online – CRISPIN ODEY, one of the grandees of the London hedge fund world, said yesterday that the industry could be doomed, likening it to the disaster that was the Lloyd\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s of London insurancemarket in the 1980s.<\/p>\n
Most hedge funds had enjoyed the massive benefit of cheap money and would be found wanting by the coming era of rising inflation and interest rates, he suggested.<\/p>\n
In a largely negative critique of the industry, Mr Odey said that hedge fund managers would struggle to adapt to the changing environment: \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cThe hardest thing to do is to think in a different way to the crowd, but in an inflation world, hedge funds get killed.\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d<\/p>\n
Lloyd\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s imploded when people realised that the participants were hopeless at underwriting risk, he said.<\/p>\n
Mr Odey also took a pot shot at funds of hedge funds \u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u20ac\u009d the pooled investment vehicles favoured by institutional investors \u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u20ac\u009d as \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cbox-ticking organisations\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d. He said: \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cIf they (hedge funds) rely on funds of funds, it\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s a doomed industry.\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d<\/p>\n