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From Kirsten Bischoff, Opalesque New York:

Despite the worry about global market instability in the wake of QE2, market inefficiencies still allow managers to generate alpha. And the decreased competition from prop trading units is an additional positive for most funds. Over the past few months numerous managers have commented to Opalesque that market activity today is very different than it was two years ago due to the scaling back of prop trade assets in the market. However, as time passes more and more prop traders are re-entering the hedge fund space. Their presence will be known, but without the benefits of a banks leveraging capabilities behind them, the impact will remain less significant than it was previously.

This influx of prop trader talent and the increasing number of UCITS-compliant fund launches are two of the biggest evolutions in hedge funds, and for fund of funds firm Key Asset Management, both have potential to be enormous boosters for future industry growth.

“There is a strong political argument for the separation of proprietary trading and other banking activities,” Dr. Chris Jones, CIO and co-Founder of London-based Key Asset Management told Matthias Knab during a recent Opalesque TV interview. Jones expects that these additions to the hedge fund world will be positive. However, h......................

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