Hedge Fund Industry Consolidation
Report: 1 in 5 Hedge Funds Could be Liquidated by Next Year
Consolidation isn’t the only force likely to shrink the hedge fund industry, according to a new report.
Bank of America Merrill Lynch predicts that as many as one in five hedge funds could be liquidated by next year. The culprit? A brutal fundraising environment in which investors increasingly prefer larger hedge fund managers.
“Going into the year-end, there will be significant closures and we estimate it could be as high as 20%,” the firm’s Justin Fredericks told Bloomberg News. “A large portion of managers are still below high-water marks. Performance is flat and money hasn’t been flowing to smaller managers.”
Hedge fund managers running less than $100 million are the most likely to be affected by the hedgicide, Fredericks, Merrill’s head of U.S. capital introductions said. Source