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Maria Milford From Kirsten Bischoff, Opalesque New York:
The landscape of the hedge fund industry has been forever changed by the redemptions that hit during the financial crisis, effectively splitting managers into two camps: mega, multi-billion dollar funds, and small boutique managers. As assets rolled back into the industry following the crisis, investors have so heavily favored larger funds that the gap between large and small managers has effectively grown to the point that investors have two distinct types of exposure, and there are solid arguments as to why both should be in a well-balanced portfolio.
The largest hedge funds (those with over $500m in AUM) have dominated asset raising since the financial recovery. Credit Suisse Dow Jones reported in their July review of the hedge fund industry that in the first half of 2011 large funds received $12.1bn in inflows, more than 1/3 of the assets that came into the industry in the beginning of the year. Unfortunately, not only have small and mid-sized funds not been able to win the confidence of investors, but they have actually seen net losses during 2011. Credit Suisse Dow Jones reports small funds lost $3.9bn and mid-sized funds lost $2.0bn (net) during the same time period. "This trend continues to demonstrate investor demand for larger-scale hedge fund managers who posses established
infrastructures," reflects the firms mid year report.
For many investors, large funds are targeted because liquidity a...................... To view our full article Click here
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