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Top 4 Hedge Fund Industry Fears | Market Insights

Hedge Fund Fears

The Top 4 Hedge Fund Fears

Over the last 3 months and a series of conversations with hedge fund managers, prime brokerage professionals, administrators and marketers it seems there are 4 big fears in the industry right now.

Top 4 Hedge Fund Fears
  1. A flat or highly volatile market for a period of more than 18-24 months - effectively wiping out those hedge funds which were hanging on for those greener pastures of another bull market.
  2. Long-term deterioration of leverage of almost any type. While many hedge funds already use no or close to no leverage many others use large amounts of it and many funds would be hampered if new regulations are put into place which severely limit their access to it. Read an article on this topic here.
  3. Desperate hedge fund managers committing enough fraud to scare off a large percentage of the High net worth and ultra high net worth investor base. There is article on my site on ethics located here.
  4. Overbearing regulation which pushes hedge fund activity into Canada, over to London and across the world away from New York. The industry is already suffering large redemption losses and regulation done the wrong way could stifle further innovation or at least push even more of it offshore. As the recently hedge fund testimony showed, many hedge funds are open to some forms of regulation or over-sight but these must be done in ways which are sensitive to the intellectual knowledge and security disclosure concerns specific to this industry. Listen to the recent congressional testimony by hedge fund managers by clicking here.
Other interesting points that have come out of talking to hedge funds - most expect the markets to stay flat or negative for an additional 6-9 months and the majority see this to be a huge opportunity for positioning their fund for explosive growth in 2010 and 2011.

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Tags: Hedge Fund Fears, Hedge Fund Market, Hedge Fund Markets, Hedge Fund Market performance, Hedge Fund Frauds, Hedge Fund leverage, Use of Leverage By Hedge Funds

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