Recent hedge fund industry developments suggest that fixed income arbitrage is increasing at a faster rate. That will augur well for the growing hedge fund industry. Hedge funds are no longer considered as alternative portfolio strategies. They are now preferred over the traditional mutual funds. A large number of hedge fund company registrations have been reported in the first half of 2006. According to a research group, Cayman Island is the hot spot for the global hedge fund industry with 80 percent of the world's hedge funds are registered with the Cayman Island Monetary Authority.
The hedge fund industry is regulated, but without any stricter guidelines. The US Securities and Exchange Commission applied a rule that required most US hedge fund advisers to register with it. They are also required to provide information on clients and submit to SEC regulated audit. Although some people oppose such regulations, there is no doubt that it will reduce the market risk by keeping fraudsters at bay.
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