Hedge Fund Reader : Study on Hedge Fund industry unveiled

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July 27, 2005

Study on Hedge Fund industry unveiled

CREATE, the UK think tank, and KPMG International presented a study titled - Hedge Funds: A Catalyst Reshaping Global Investment. This study presents the views of 550 top executives in 35 countries involved in hedge funds with combined assets worth US$ 23 trillion. The study indicates that prolonged bear market and the inflow of top talent capable of generating high returns are the main reasons for growth of hedge funds the world over. This has led to tremendous increase in the number of start ups in the arena. However, not all of them are able to generate double digit returns as the investors are led to believe. Therefore, poor returns and mis-pricing of complex products is a common fallout. Professor Amin Rajan, the report’s principal author and the CEO of CREATE said that at least 55 % of the funds are ‘wannabes’ who have potential but are not tested. Another 15% are star performers who are making all the numbers. Balance funds are not worth much of mention since they are the ones who face all the brunt of inadequacy and lack of experience. The study also made it clear that in order to make profits in the future, the fund operators will have to be creative and innovative. Caymannetnews.com reports:

“The study predicts that the next wave of new money into hedge funds will come from pension funds that have so far adopted a wait and see attitude. Those in the USA are likely to have bigger allocations than their peers in Europe and Asia Pacific”

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July 27, 2005 in Research | Permalink