February 20, 2006

Are Hedge Funds taking a hit?

The hedge funds sector, a US $1.1 trillion domain that had doubled since 2000, is reportedly undergoing a market correction phase. Well at least it seems so from the December 2005 performance of the hedge funds. Net money flows into hedge funds, which are essentially the investment pools available mainly to institutional and wealthy individual investors, were reportedly down 44% in the third quarter on a year-on-year basis, according to industry statistics. And according to industry observers and trackers, the fourth quarter growth almost stagnated.

As the money flows dried up, so did many of the hedge funds. Chicago's Hedge Fund Research reported in December 2005 that through September 30 2005, a record number of hedge funds 484, more than 6% of the total hedge funds had shut down in 2005. The situation could somewhat be termed as a recession for hedge funds sector. And a lot would depend on how the hedge fund performance picks up.

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February 20, 2006 in Research | Permalink




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