Worst not over for hedge funds
The worst is not over in the hedge funds sector, with more collapses likely this year, according to the head of the Bank of America’s alternative investment group, David Ballin.
Ballin told this week’s Reuters Hedge Fund and Private Equity Fund Summit in New York that the hedge fund collapses would come as managers struggled to borrow the new money they needed to trade and in the wake of customer disappointment in the returns they generated.
“Some funds simply will not do well, particularly those specialising in fixed income markets,” he said.
Ballin said that the pressure for hedge fund managers was two-pronged with investors hastily handing in redemption notices to get their money out while bankers were getting stingier with loans after having to write down billions in bad debt.
“If this condition lasts for a long time then it could dampen returns,” he said.
Ballin said Bank of America had fired roughly 15 per cent of the hedge fund managers it uses and that if other large investors were also scrutinising their managers, this could hasten the pace of potential collapses.
AUTHOR
Mike Taylor
Recommended for you
Having seen inflows of US$5.6 billion to its fixed income funds in the last quarter, Janus Henderson has closed on a deal with life insurer Guardian to secure funds to boost its product development.
One of Metrics’ four managing partners is to step back from the business next year, having worked at the firm since its inception in 2011.
VanEck’s Bitcoin ETF has amassed $290 million in assets in its first year, but the ETF provider has said financial advisers remain skeptical of the asset.
State Street has rebranded its State Street Global Advisors arm, which has US$4.6 trillion in assets under management, following a series of deals with financial services firms in recent months.
