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From Prime Time, a newsletter for fund managers form Fortis Prime Fund Solutions: Contrary to what many observers are saying about the maturation of the hedge fund industry in the US, and, even in light of the recent scandals like Bayou and Portus, we feel the future is bright for the growth of hedge funds in the US. Here’s why:

• In 2004, over USD 20 billion in new investments were made by pension plans. There is every indication that more plans are going to allocate to hedge funds and at higher percentages of total assets. The search for higher returns along with diversification is on.
• Outside the US, returns have been in double digits. US managers will be able to fi nd new products/opportunities to take advantage of higher returns internationally. Hedge funds are best positioned to react rapidly to new markets.
• Of the 5,000+ funds in the US, only about 250 account for 75% of the total assets. Generally speaking, with size come more moderate returns. This creates tremendous opportunities for smaller funds and new entrants to take advantage of higher returning investment products.
• The S&P along with other indices have remained relatively fl at the last several years. Hedge fund vehicles are best positioned to take advantage of beating these indices using sophisticated products and strategies.
• In an unusual anomaly, management and performance fees are rising versus declining. This continues to attract new US entrepreneurs and helps make even smaller fund......................

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