This Business Week article reports that net inflows of money into hedge funds have dried up, performance has lagged the broader market (although several commenters take issue with the index used for comparison), and 484 funds, more than 6% of the total, have shut down during the first three quarters of 2005 (data for the 4th quarter isnâ€™t available yet). Conversely, as I noted in this post yesterday, inflows into buyout and venture funds are way up. It looks like some sector rotation is going on.
Is the Hedge Fund Boom Over?
3 responses to Is the Hedge Fund Boom Over?
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January 28, 2006
[…] The hedge fund registration requirements debated extensively in the blawgosphere a few months back (see, e.g., here, here, and here) will take effect on Wednesday of next week. According to this article in the W$J, so far 530 hedge fund advisers have registered and a few hundred more are expected before Wednesday. Recent estimates put the number of hedge funds at around 8,000 (although the number may be on the decline). So why havenâ€™t there been more registrations? Well, the rules do not require registration if customers cannot withdraw money from an adviserâ€™s fund for two years or more or if the fund is not taking new investors. Hence, a number of advisers have increased the lockup period for their funds to two years and others have closed their funds to new investors. Additionally, some hedge funds advisers have previously registered or are waiting to register pending the outcome of litigation challenging the rules (see this article). […]
January 20, 2006
[…] A new blog, Truth on the Market noticed this article and noted a number of hedge funds had already closed through the third quarter and that there seems to be “sector rotation” going on in the world of alternative investments. […]
Since when are hedge funds (they of the alleged absolute returns) indexed to the “broader market”? But, yes, there is a big shakeout in certain hedge fund strategies.