Hedge Funds in Russia
Hedge Fund Managers in Russia Struggle
Below is an article on the Russian hedge fund industry and how it is fairing - which is not well at this point. This article is being added to our site's Russian Hedge Fund Guide.
Up to half of Russian hedge funds could go out of business as the financial crisis sends investors fleeing and the stock market continues to fall, according to industry experts.
Speaking at the Russia Alternative Investment Summit on Wednesday, Simon Fentham-Fletcher, head of fund of hedge funds at Raiffeisen Bank, said in a worst-case scenario, 50 percent of Russian hedge funds could close. The primary source of failure will be a lack of funding as performance deteriorates and investors redeem their money, he said.
"If they're not well-capitalised they can't look after themselves properly. It's expensive to run a hedge fund out of Russia and you can eat into your reserves very quickly," said Fentham-Fletcher, who is based in Moscow.
Christoph Kampitsch, head of alternative investments for Erste Bank, said there were about 75 hedge funds operating in Russia but by January next year this number may be closer to 25. Fentham-Fletcher said the vast majority of hedge funds in Russia were equity focused with only minimal hedging -- positions designed to reduce losses when markets fall -- and as a result had been badly affected by the decline in the stock market.