Hedge Fund Reader : Finding a hedge fund manager has become like finding a needle in a haystack

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October 13, 2005

Finding a hedge fund manager has become like finding a needle in a haystack

The hedge funds market has been quite claustrophobic due to a increased competition between hedge funds. Even the returns delivered by them are jaded and unimpressive from what they were in the last decade. This is due to the fact that with the influx of more money to be managed there has to be a larger work force handling the kind of corpus. The returns delivered by hedge funds are skewed, since new managers are mediocre and the process to identify an apple from an orange is difficult. It has been difficult for investors to choose the right destination to identify the most appropriate hedge fund manager to assign under him a large chunk of money on his face value. However, the times for hedge funds are quite strenuous due to declining returns so the times lined up ahead for them is tough with decline in the quality of people. Reuters Reports:

"It's not easy to find talent," said Peter Fletcher, management director of Swiss-based Parly Company, which invests in hedge funds. "We think of hedge funds as predators in the jungle, except these days the prey has been eaten." Too-much money chasing too-few profit opportunities has left many hedge funds nursing negative or flat returns over the last couple of years. Part of the problem has been a lack of volatility which creates mispriced assets.

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October 13, 2005 in Research, Strategy | Permalink