The dominant players in the rapidly growing hedge fund industry will be on opposite ends of the industrys spectrum, Donald H. Putnam, chief executive of Putnam Lovell NBF Securities, said at the ninth Global Alternative Asset Management Forum in Geneva, Switzerland. On the one hand, large, sophisticated firms with access to capital, and on the other, small, focused, talent-driven boutiques will dominate the space, Putnam said.
Speaking on a number of issues concerning hedge funds, Putnam cautioned regulators that more rules governing the products could have the unintended consequence of curbing growth of a product that has proven its rightful place in investors portfolios, particularly during this bear market. "Alternatives can and should mitigate negative returns and improve portfolio risk-adjusted returns," he said. "Hedge fund demand from institutional and high-net-worth investors has exploded during the bear market."