Starting a hedge fund is harder, but that won't stop people from trying: The Economist

Breaking into the hedge-fund world is harder than before, said The Economist this month, citing declining fees, lower returns, investors' demands for sturdier back offices, the institutionalisation of investors (who are more risk averse), and the exodus from banking star traders to hedge funds being over. The report also reminds us of the possible outperformance of new hedge funds, and of the growing business of seeding. Below is a graph from the article:

Source

"Running a successful hedge fund is still fabulously lucrative, however," the article concludes. "The top 25 managers globally last year took home a combined $14 billion in pay and profits, according to Institutional Investor's Alpha -and that was the worst year since 2008. Nine made over $500m. Even if the going is tougher, aspiring managers will keep trying their luck."

We recently heard of those ex-hedge funders striking out on their own:

1. Three veteran investment professionals formed Witherspoon Asset Management LLC, a Princeton-based investment adviser: Lee Gladden, who will be CEO, Thomas Kuntz, COO, and Tyler Vernon, Managing Director. Both Gladden and Kuntz share a backgroun......................

To view our full article please login

This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.