European Fund of Hedge Funds
European Fund of Hedge Funds Face Grim Future
Having seen $130 billion (84.5 billion pounds), or more than a fifth of assets, leave since the start of last year, firms are still finding asset-raising tough, as witnessed by Eddington Capital's recent decision to shut down and return clients' cash.
And with negative returns so far this year hardly likely to encourage a flood of new investors, a sector that many say is overcrowded will have to face up to lower incomes and higher costs, through closure or deals, or by changing their focus.
"There will be attrition," said Mark Wightman, hedge fund industry commentator and head of strategy for Asia-Pacific at specialist technology group SunGard.
"I'd expect M&A and consolidation in the sector because a lot of guys are doing similar things," said Wightman who closely advises funds of funds on corporate issues.
Last year Cheyne Capital bought smaller fund of funds firm Altedge, while last month Swiss private bank Reyl Group's fund of funds unit told Reuters it was looking at options such as a merger or acquisition to help it bulk up. Source