Hedge funds took a major hit in 2008 and will continue to decline this year, but the industry is sound and will gradually recover.
Boston, MA, March 16, 2009 – A new report from Aite Group, LLC examines current trends in the hedge fund industry and how they will impact the future of the space. The report sizes today's hedge fund market, anticipates likely regulation, and considers the future of the prime brokerage business.
Despite common misconceptions, the hedge fund market has fared relatively well throughout the financial crisis. Hedge funds have become part of the fabric of the investment management business, and will remain so going forward. Nevertheless, changes should be expected. Incentive fees may decrease, weaker players will fall by the wayside, and regulation will certainly increase. The prime brokerage business is likely to be permanently altered, but the effects felt by the hedge funds they service will be minimal.
"To those that point to the imminent demise of the hedge fund business, its investment strategies and pricing model, let's not make haste," says Denise Valentine, senior analyst with Aite Group and author of this report. "Industry participants from all sides will alter behavior to respond to the current market crisis and its aftermath. In the end, the industry will survive. It will be altered, but also sound."
This 18-page Impact Note contains two figures and four tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.