Cash may have been pouring into hedge funds at a faster rate in the past quarter, but the little fish may soon find themselves on the hook…
The hedge fund industry remains shakey and needs to string together a series of quarters of stable returns to soothe investors’ nerves. There is also a flight to qualilty. Nervy types would prefer to invest with larger firms that have diversified trading strategies. In a highly-fragmented and over-populated industry, such firms will be the likely winners, especially as they can also better afford to attract money back through lower fees. US hedge fund Fortress is already considering gobbling up competitors. The big boys are about to come out and play. Smaller funds need to watch out.
Read the full Lex note here
Related links:
Hedge funds buoyant as assets under management surge – FT
Fortress plans buying spree – FT Alphaville