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March 20, 2006
Hedge funds Industry Dynamics
Till sometime back the estimated number of hedge funds was reported at over 8,000 active hedge funds. Add to this the trend of the marketplace – where more and more hedge funds managers are setting up their shop each day. And this brings the potential number of hedge funds in the market in the future simply to a staggering proportion.
Well you might ask – what is the big deal about the growing numbers? Or how is going to affect the markets? Or how is going to be a challenge?
Well to come to the point directly, all that can be said that although this growth in the number of hedge funds seems to augur well for the industry – there is an inherent challenge for the managers of fund of funds. The biggest challenge is to pick the best performers and promise holders out of such a huge and rapidly growing universe of hedge funds. To fight this issue, most fund of funds managers are increasingly turning to new talent, who they say provide better returns than their more established counterparts.
The trend witnessed recently in the heating up hedge funds scenario is that coup on the energy sector. The leading investment banks and financial services giants such as Goldman Sachs and Morgan Stanley are reportedly making a killing on energy investments. And it happens to be no surprise that aggressive hedge fund managers have been getting in on the action, and more are likely to do so in the coming months at the energy front.
As they say in the capital markets – the market is back! This time it is back driven by interest into the energy commodity driven investment and the exiting of the previous fixation of electric utilities.
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