Disappointed by returns, investors in many hedge funds will withdraw as much as $500 billion of their money, leading to the inevitable collapse of a number of hedge funds, the Financial Times reports, citing the predictions of hedge fund-of-funds manager Giles Conway-Gordon, a managing partner with Cogo Wolf.
Too many hedge funds run quantitative models that cannot deliver strong returns, Conway-Gordon said.
“I don’t think [the hedge fund industry] can support $2 trillion in assets. I think we are going to see large numbers of hedge funds go out of business, and rightly so,” he said. “Hedge funds are supposed to avoid losses when things are bad, but there are very few of them that can break even then. I think a lot of them are not earning their keep.
“I think we are going to see a very sharp Darwinian process in the next six months,” he added. “Things have been too easy for too long, and I think cold winds are about to blow.”
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.