Hedge Fund Reader : Death Knell sounded on the number of Hedge Funds

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October 01, 2005

Death Knell sounded on the number of Hedge Funds

Tribeca Global Management, a proprietary hedge fund unit managed by Citigroup said the number of hedge funds will decline from the current number of 8000 operating hedge funds to a reduced estimate of 5000 operating hedge funds in the next five years. This decrease in the number is due to stiff competition and rise in operating costs. The markets are changing dynamically, and it is being difficult for hedge funds to cope up with them. The market trend three years ago lasted for approximately four weeks, but now there are at least 10-20 trends running in the market and they normally do not last for more that 72 hours. This trend is particularly observed in focus areas - equities, debt, commodities or foreign exchange markets, and statistical arbitrage. The stakes are high and one cannot afford to miss this bus or go bust. The past performance of hedge funds can no longer be considered as a yardstick to future expectations due to the dynamism of asset products. Reuters Reports:

Styblo Beder said boutique hedge funds would specialise in areas such as trades linked to catastrophic events, insurance derivatives and credit arbitrage. Very large funds would focus on multi-investment strategies.

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October 1, 2005 in Research | Permalink