The incredible shrinking hedge fund industry
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Will you miss them when they’re gone?
The hedge fund industry continues to shrink drastically as well-heeled investors pull their money out, and as stocks worldwide sink.
From Bloomberg News:
Hedge funds worldwide shrank by 9% to $1.56 trillion last month, the lowest level in two years, after investors withdrew cash and stock markets declined. Investors pulled $40 billion from hedge funds in October, according to Chicago-based Hedge Fund Research Inc., while market losses cut industry assets by $115 billion. Hedge funds fell by an average 6% last month, pushing the year-to-date decline through October to 16%, according to the HFRI fund weighted composite index.
That still was a better year-to-date performance than the Standard & Poor’s 500, which was off 32.8% through October. But it isn’t an apples-and-oranges comparison, because the hedge fund average performance includes results for all sorts of different strategies, including shorting stocks.
HFR estimates there were 10,000 hedge funds at the end of October.
In 2007 the funds took in a record $194 billion in fresh capital -- just as markets were peaking.
There must be a lot of wealthy people who wish they’d never heard the term ‘hedge fund.’