| Less and less hedge funds are being launched. The credit crunch and
the tightening of capital markets have made it increasingly more
difficult for hedge funds to raise the capital needed to be
competitive. This year, the hedge fund industry expanded by only 589,
due to the fact that so many funds were forced to close or merge. This
was the lowest increase in six years. Investors are looking for security in this loosely regulated market, so they trend toward established larger
firms as `safe havens' to invest their money. What is more, some of
the larger hedge funds are beginning to resemble investment banks by
lending capital. Large hedge funds are seeing an increasingly more
important role in shaping the financial landscape. They use their
investment strategies not only to take advantage of changes within
companies, but now to influence those changes- as we have seen
recently with Mr. Carl Icahn and Yahoo. Will this mean the end for
small hedge funds- not likely. In the short run the industry with
contract and consolidate, but once the US economy picks itself up and
people are once again in the money, there will without doubt be a
resurgence of hedge funds. |
