•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

Bailey McCann, Opalesque New York:

Hedge funds have taken a beating lately over poor performance and high fees. Some managers have said that the prolonged equities rally is making it hard to compete, but others are going further. Delegates at the recent Opalesque Miami Roundtable suggest that its time for the industry to consolidate significantly and for managers to start limiting their capacity in order to stay nimble.

"I think that the industry needs to shrink by probably 65% or 70%. I think too many people who shouldn’t be in hedge funds are in hedge funds; there are a lot of managers out there who are not really differentiating themselves, who don’t provide real value," says Pratik Sharma, Founder, Atyant Capital. "Just statistically, it’s impossible for that many people to provide outperformance. It is just not possible."

Hedge funds currently manage approximately three trillion dollars in aggregate - far less than the mutual fund industry. But, as the number of assets managed by hedge funds has grown, it's become harder for the largest funds not to look and feel like a mutual fund or index product. Many of the biggest hedge funds pile into positions in mega-cap companies resulting in a long book that doesn't look much different from cheaper index products. These similarities raise questions about the ability of hedge fund strategies to outperform without capacity limits when markets are crowded.

Atyant's Sharma touched on this too. He notes t......................

To view our full article Click here