Ads
December 09, 2005
Hedge Funds could magnify impact of an upset
According to Hennessee Group, a hedge fund adviser, the number of funds floating in the global market has more than doubled, and assets have grown to over a trillion dollars from as little as US$200 billion. Heavy investments have found their way into the hedge funds arena, driven away by a weak stock market and low interest rates. Investors have banked on the hedge fund bandwagon to achieve higher returns.
With such a colossal size, these funds have the potential to magnifying the impact of any significant event. Any unforeseen event could derail the hedge fund sector. These events could even include a terrorist attack, default by a large borrower, or a sudden shift in interest-rate policy by the Federal department. The reason for the panic undercurrent is that any bad news could lead to investors seeking the exit route. In a hasty market, hedge funds would only stand to loose – thus magnifying any significant upset.
--
Did you enjoy this post?
Comments
Post a comment
« Project Finance Driving Hedge Fund growth | Main | Hedge Funds Bullish on Gold »
Syndicate
Comments