Hedge Funds Expect Boost from Clearer Rate Views, Policy Shifts
A clear direction of travel for interest rates, more settled government policy and manageable volatility in the financial markets are creating very constructive conditions for hedge funds heading into next year, industry leaders said yesterday on FundFire’s Exchange webcast.
The more constructive environment has helped fuel strong returns at some of the biggest hedge funds and inflows this year as allocators look for more uncorrelated opportunities.
The industry gathered an estimated $33.7 billion in net inflows in the third quarter, its biggest quarterly haul in nearly two decades, according to Hedge Fund Research.
Emerging managers also remain optimistic about launching new funds in today’s environment. However, they still have to face the reality that eight out of every 10 hedge funds that launch fail within their first five years, said David Goldstein, director of fund services at STP Investment Services. “It’s a market that will shake out those people that that cannot capitalize,” he said.
About 70% of funds looking to launch remain long-short equity focused, with the remaining 30% falling into other buckets, such as multi-strategy or commodity trading adviser strategies, Goldstein said. One short-only fund also launched this year, he said.
If you’ve missed the webcast, you can watch it on demand in FundFire.
