Hedge Fund Reader : Hedge Funds Era: Emerging Horizons

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January 06, 2006

Hedge Funds Era: Emerging Horizons

The last few years, or at least the last year, could be termed as the year of hedge funds in context of the investments. Hedge funds – the largely unregulated brackets of private capital, which were once generally available only to institutions and the super-duper rich, proliferated into at least the segment of large retail investors. Well at least a portion of this statement can be deemed to be correct, if not all. The increasing popularity of the hedge funds as investments was only rivaled by the scandal articles published about it.

Traditionally, the hedge-fund managers were known to be wary of media attention and avoided disclosure of any sort to the prying media eyes. These Garbos of the asset management world preferred to be left alone by all and sundry, including the media, the public, and above all, by the Securities and Exchange Commission.

However, in recent years, especially in 2005, these very hedge fund managers have thrown their weight around and claimed their stake as the brains behind one of the most mesmerizing investment strategies. Some of the aggressive hedge-fund managers are shaking-up management and pushing restructurings at leading blue-chip companies such as Time Warner and McDonald's.

While other hedge funds managers did something totally different - not content with manipulating with the stocks and investments, went on to leading positions at well-known companies. A good example is Edward S. Lampert who has done it at Sears.

By some estimates, the hedge-fund industry has nearly doubled in the last four years; there are now an estimated US $ 1 trillion in assets across 8,000 funds. Leading institutions such as university endowment funds and state employee pension funds are dumping money into hedge funds. Further as a tip off for the future, hedge funds are going retail big time - with investment banks having rolled out funds, which let big retail investors taste the once unaffordable investment option.

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January 6, 2006 in Emerging Markets | Permalink