Reuters- The hedge fund and private equity industries have reached a near-term peak in their cycles after years of rampant growth, speakers at a Reuters Forum said on Thursday.<\/p>\n
“Private equity and hedge funds both have cycles, and I think we’re now at the peak of the cycle for the time being,” said Anthony Bolton, a star fund manager at Fidelity International.<\/p>\n
“The flow of money has encouraged some mediocre people. They will all be wiped out in the current environment, which will allow the good people to go on.”<\/p>\n
The $2 trillion hedge fund industry has seen huge inflows from institutions and wealthy individuals in recent years, thanks to its ability to make money in all market conditions.<\/p>\n
But many funds were hit hard by equity and credit market turmoil this summer, prompted by fears that a surge in defaults in U.S. subprime mortgages would spark a wider financial crisis, and leading to worries about a wave of redemptions by investors.<\/p>\n
“There’s bound to be some backlash,” said Helena Morrissey, chief executive of Newton Investment Management. “A huge amount of money has gone into some assets, and people will question that.”<\/p>\n