Hedge funds are the vanguard of a financial revolution. Once little-known and secretive fringe forces, they have become leading actors in reshaping the corporate world. So it is only fitting, says the FT’s editor Lionel Barber, that the FT is publishing a special report on hedge funds.
See links (below) for a comprehensive list of the 100 most prominent hedge funds to watch, with fascinating insights into the new breed of financiers challenging traditional forces in the City of London, on Wall Street and other leading financial centres. We draw on the expertise of FT correspondents around the globe. They explore the broad impact on the world of finance; show how hedge funds are remaking financial markets; document how they have become Wall Street’s most important customers, and ask: could they replace Wall Street?
More than a century ago, the Carnegies, JP Morgans and Rockefellers made fabulous fortunes and remade the face of corporate America. Today, hedge funds play a similar role throughout the world. As one City of London veteran remarked: they are the new JP Morgans. In this spirit, we hope readers will follow the great man’s own words: “Go as far as you can see; when you get there, you will be able to see farther.”
Also in our special report:
- Investment outlook: James Mackintosh, the FT’s hedge funds correspondent, examines how and why – misgivings aside – investors are still piling into hedge funds and the remarkable effect these mostly offshore, lightly-regulated investment vehicles are having on financial markets.
- Ousting the banks: Gillian Tett, the FT’s capital markets editor, looks at how traditional lenders are being sidelined by the new participants, evident in a striking new statistic: for the first time in Europe’s vast – but somewhat shadowy – leveraged loan sector, banks accounted last year for less than half of activity in the primary leveraged finance market, compared with 90 per cent in 2000. The swing highlights the rising power of hedge funds, among other factors.
- A force for massive change: Anuj Gangahar, US equity markets correspondent, looks at the impact of hedge funds on the world of high finance, how banks are increasing their stakes in hedge funds, and how the rise of Citadel Investments to become one of the world’s largest and most prominent hedge fund firms aptly illustrates these trends.
- The truth about activist managers: Ben White, the FT’s Wall Street correspondent, says that while activist hedge fund managers are often vilified as voracious locusts, new research suggests that activists often have a more beneficial impact, improving both short-term stock prices and long-term corporate performance. And in most cases, the activists work with corporate managers rather than against them.
- The enclaves – North America’s Hedgistan: Anuj Gangahar looks at the new ‘Wall Street’, from “Lower Hedgistan”, a swathe of midtown Manhattan, to “Upper Hedgistan”, in Greenwich, Connecticut — home to almost half the world’s 350-odd hedge funds with more than $1bn assets each – to explain why such enclaves have prospered in North America.
- The enclaves – The transformation of Mayfair: Paul Davies, an FT capital markets correspondent, looks at how the hedge fund industry has transformed London’s Mayfair district from a steadfast village within London for the English landed gentry into a booming centre of new money, and added a third centre to London’s axis of financial power, alongside the formerly dominant square mile of the City of London and the gleaming satellite of steel and glass at Canary Wharf to the east in the former docklands area.
- The enclaves – From Chelsea to Verbier: The FT’s Gillian Tett explores the Swiss ski resort of Verbier and London’s chic Chelsea district to examine the considerable effect “les hedgies” are having on the top enclaves of Europe
- How they spend it – Big art for big money: Deborah Brewster, an FT fund management correspondent, looks at the unexpected impact of hedge funds on the art market and how fund managers have emerged not only as big collectors, but also as big donors to museums and fixtures on the art circuit.
- A short history of bankruptcy, death, suicides and fortunes: Steve Johnson, an FT funds management correspondent, looks at the intriguing history of an intriguing industry, beginning with Alfred Winslow Jones, a one-time reporter on Fortune magazine, widely regarded as the father of the hedge fund industry. In truth, he says, other pioneers blazed a trail for Jones, most notably Jesse Livermore, a farmer’s boy from Massachusetts.
- THE LIST: the top 100 hedge funds to watch, and details of their managers, strategies, funds under management and key features. The FT’s James Mackintosh also examines how and why these hedge funds made it into the FT’s list. The one thing they all have in common, he notes, is that hedge funds have few common features – apart from their performance-linked fees.