June 08, 2006
Are hedge funds going the mutual fund route?
As hedge funds grow and become too big for their boots, they need to diversify and grow. Geographic diversification is hence a natural progression. For a growing number of hedge funds this is the next step in their evolution from relatively simple vehicles into complex organizations.
However, with diversification come problems associated with growth. Now as hedge funds begin to get money from traditionalists like pension funds, foundations, college endowments and the like, the pressure on them increases. They will now be forced to measure up against index benchmarks. And, very soon, we may even see them bidding goodbye to their ‘high costs’. So can we make predictions about the future of hedge funds since they seem to be following a well-beaten track – that of hedge funds? Iht.com reports:
There will be an industrywide scandal. This may seem a bit silly to say. Blowups and scandals have been a part of the hedge-fund saga since its first chapters after World War II. What is meant by this prediction is a broad industrywide scandal complete with multiple oustings of chief executive officers, congressional hearings, and studies by academics proving that the whole concept has gone wrong.
Read more: Funds: Hedge funds on road already taken
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