Smaller Hedge Fund Launches

Smaller Hedge Fund Launches

Hedge Fund Launches Increasing But Smaller

The number of new hedge funds is on the rise but considerably smaller than the launches a few years back.  As investors are less confidant in the industry than they once were, new hedge fund managers will likely have a tough time attracting capital.  Experienced managers that once raised $1 billion for a new fund and had to turn down eager investors are now having to work hard to raise more than $100 million.
Now, as markets revive and traders see an opportunity to be their own boss, Wall Street's largest prime brokers expect a spate of start-ups in the next year -- just a lot smaller.

"It's a promising environment for new hedge funds," said Alex Ehrlich, the former UBS prime brokerage chief who took over as global head of Morgan Stanley's (MS.N) prime services business last month. "Money is coming in from seasoned investors, many of whom are preparing to redeploy capital."

A few weeks ago, Morgan Stanley hosted its largest ever capital introduction conference for fund managers and investors. It's a positive signal even if the meetings took place in suburban Rye, New York, and not Morgan Stanley's traditional venue in Florida's Palm Beach.
Still, times have changed. Even the most talented traders and managers will have to accept that $100 million is the new $1 billion when it comes to fund-raising.  Source

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