Hedge Fund Industry

Discussion in 'Professional Trading' started by TSGannGalt, Dec 7, 2006.

  1. Yes, I'm a bit bored so I'm only wasting time while my computers are occupied during tests...

    Anyways... there are definite changes in thehedge fund industry.

    Recently, I'm seeing news on hedge funds frequently than ever. Looking back like 3-5 years ago, there were limited information about the industry to the public. Of course, there are a lot of managers who continue to keep themselves out of the public eye.

    There are a lot more $1B+ Funds. It's a lot more easier to raise capital than before. There are first year funds raising $100M, compared to no one even looking at you until you pass the 3 year test.

    There are Ph.D.s starting funds compared to traders who can "actually trade"running them.

    Funds are going public, issuing bonds, Do-It-Yourself Hedge Funds, and etc..

    Is this all a hype?

    Are hedge funds accepted as a investment vehicle, more than before?

    What will the future of the industry be? in 5-10 years.

    PS. Sure... traders will always be trading. No doubt.
  2. The hedge fund industry is becoming more and more institutionalized with many funds simply being long/short equity. Its my opinion that soon the majority of hedge funds will be practically indistinguisable from mutual funds, et al.


  3. Extremely low taxes (There's really no such thing as "no taxes") in tax havens are only part of why hedge funds are located offshore. As a manager, another favorable part of going offshore is the "fund friendly" regulations in offshore centers. Meaning, if you cover the basic factors of trading (Series 3 equivalent), you can pretty much do whatever you like.

    The hedge fund regulations are starting to pop-up in the US already, but when treated like a mutual fund, the nature of the hedge fund becomes deminished. One advance of a hedge fund is the ability to flip portfolios of markets and strategies according the manager's view of the market. If treated like mutual fund, this becomes harder to do and deminishes the "edge" over mutual funds.

    If hedge funds become like mutual funds, then we'll just suck it up and do what's best but hopefully that doesn't happen. Another issue is, it may cause lower numbers of startup hedge funds, leading to cash being centralized to existing institutions and hedge funds killing each in the market.

    And this is not a good thing for retail traders too. The market will becomes choppy, and untradable.

    Think about everyone trading the same trading systems. It'll kill each other out, money just flowing one place to another in circles.

    After all, Steve Cohen's comment on most hedge funds crashing may happen.