Monday, December 05, 2005

Hedge Funds-Adapt or Die!

This article by Grail Partners, consultants based in Boston, provides some interesting thinking about the evolution of the hedge funds industry.

A three-fold increase in institutional investors' hedge fund investments over the next five years – to $950 billion – will double industry assets to $2.5 trillion.

However, the industry will be dominated by multi-strategy, multi-billion players rather than what is primarily a cottage industry today.

Corporate pension plans which have been struggling with low returns, aggressive return assumptions, and volatility will turn increasingly to fund of funds or multi-strategy hedge fund solutions. In the view of the author, this will represent a “climate change” for many hedge funds which will either adapt or die.


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