October 08, 2006

Hedge Funds Slowing Down?

Is it a contraction in the hedge fund industry or is nature just taking its course? This year has seen a slump in the number of new funds launched - a marked contrast to the spectacular growth of the past few years. Has the industry seen the peak of the normal distribution and the future set to slide down the curve?

The numbers speak for themselves – according to Hedge Fund Research, only 549 new funds were started during the first six months of this year when compared to the 1,211 during the same period in 2005. This year’s growth is reminiscent of the patterns in 2002 and 2003.

It doesn’t help that Amaranth Advisors is dominating the news these days after losing $6 billion in the span of one week. So will the industry revive during the latter half of 2006? We’ll just have to wait and watch!

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