Some industry watchers believe the question about hedge fund regulation shouldn’t be if but when, Mondaq reports.

Two of the biggest factors seen are hedge fund’s tremendous growth, and with that, influence on the market, and institutional investors’ increased interest in hedge funds. By some estimates, hedge funds have grown from 400 funds with $50 billion under management just five years ago to 7,000 funds with more than $1 trillion under management.

In addition, the exposure of fraud and blow-ups are contributing to a changing regulatory environment toward hedge funds.

In addition, as hedge funds look to compete with one another, they are turning to more complex instruments and increasing their potential risk.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.