Hedge fund industry set to shrink
The hedge fund industry is likely to shrink considerably in the coming months, according to Peter Noris, chief investment officer of Ivy Asset Management.
Noris said while hedge fund investing “as a concept, is not going away”, he does believe there will be significant consolidation in the sector.
“We believe the hedge fund industry will certainly shrink meaningfully as we move towards the end of the year,” Noris said.
“We are now in a period of industry consolidation, where today’s losers will be sorted out from tomorrow’s winners.”
Noris said while hedge funds “as a whole have been producing acceptable levels of alpha in relation to the broader market”, he did admit that absolute returns have been “less than expected”, with September’s results in particular showing signs of the volatile investment conditions.
Noris said hedge funds should benefit from the scaling back of many investment banks’ proprietary trading operations.
Noris said the current environment favoured hedge funds with experience, business stability, institutional infrastructure and broad investment expertise.
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