Post-Crisis Hedge Fund Investors
Hedge Fund Investors Still Wary Post-Crisis
According to recent data, hedge funds are not recouping losses suffered during the recession. Hedge funds made great gains in 2009, but investors aren't flooding back to the extent that managers expected. There is even a small outflow from hedge funds in the first half of 2010 according to Credit Suisse.
There are good reasons, Breakingviews says. First, after the 2008 debacle, retail investors, who once were eager hedge fund customers, at least outside the United States, have lost enthusiasm. Institutions, meanwhile, are taking their time setting strategy, the publication says. Second, hedge fund clients still haven’t forgotten that many managers locked up their assets at the height of the crisis, Breakingviews notes. Credit Suisse estimates that about a third of the $174 billion of assets frozen in that way still haven’t been thawed by their managers.
Third, recent market gyrations have left investors uncertain. After losing big as asset values plummeted in the crisis, plenty of investors see the merits of hedge-fundlike strategies that employ both long and short bets. But they have no reason to hurry with markets volatile and seemingly in limbo, Breakingviews suggests. The problem for hedge fund managers is that those same conditions, along with intensifying regulation, force them to be cautious, reducing the likelihood of big returns, the publication says. So until markets turn friendlier, the industry may struggle to grow much. Source
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