January 30, 2006
Prime brokers lose lead to multiple brokers as Hedge Funds grow
Hedge funds managers rely heavily on their prime brokers to keep a track of their various accounts with various companies. Most Hedge funds had one prime broker catering to their portfolio management needs. Not any more.
The recent growth in the hedge fund market is making prime brokerage an irrelevant idea. More and more fund managers are employing more than one prime broker to meet their growing business demands. Even smaller funds have more than one broker, while the bigger ones have as many as six to eight.
This has opened the market for the smaller players specializing in different aspects of portfolio management. In fact several large prime brokers have opened smaller firms servicing different areas. It has also helped Hedge funds as they are able to maintain greater confidentiality by not disclosing all of their information to one prime broker. Post Gazette reports:
"Most big funds use many prime brokers, which turns the concept on its head," says Michael Roth, a founding partner of Star Investments, which manages more than $7.5 billion in its various hedge funds. Star has a "core group" of six to eight prime brokers and relationships with as many as 20 smaller outfits.
--
Did you enjoy this post?
Comments
Post a comment
« EU market regulators disallow Hedge Fund indices | Main | EuroHedge Summit 2006 to debate on the Strategies of the Future' »
Recent Comments