| Submit your comments on this article |
| Home Front Economy |
| Third of Hedge Funds Face 'Wipe Out' After Slump, Godden Says |
| 2008-12-16 |
| Almost a third of hedge funds will shut or merge after the $1.5 trillion industry posted its worst ever performance this year, according to IGS Group, which advises hedge funds on raising money. "The failure rate is going to go up, the closure rate is going up, and the merger rate is going up," IGS Chief Executive Officer John Godden said in an interview in London. "It's going to be a 30 percent wipe out." The number of hedge funds more than tripled in the last decade to a record 10,233 at the end of June, according to Chicago-based Hedge Fund Research Inc. That number will likely tumble after funds dropped 18 percent in the year through November, the worst year since HFR started its Fund Weighted Composite Index in 1990. IGS will team up with Grisons Peak, a financial advisory firm to start Alternative Investment Management Banking, a firm that will advise hedge fund managers on mergers. Godden and Paul Sullivan, a partner at Grisons Peak, will oversee the venture, with each firm contributing three to four employees. The firm aims to advise on six to eight transactions next year. Hedge funds typically charge a 2 percent management fee and keep 20 percent of profits, while funds-of-hedge-funds typically charge 1 percent and 10 percent of profits. Profits are usually based on high-water marks that could take years to reach again. Many funds may have been "cavalier" about actually charging management fees, giving rebates to large investors or distributors on the expectation the fund manager would more than make up the shortfall through performance fees, said Godden. |
| Posted by:Fred |
| #11 Last I read, Soros was up $3-4 billion on his bets of a mortgage meltdown. Bottom line, in a decent world he wouldn't be able to use his brain to make money off the rest of us. He'd be living in the next trailer and standing in the same lines. I mean it just ain't right! Hell, let't take his dough and eat heeeeem! |
| Posted by: .5MT 2008-12-16 18:52 |
| #10 Soros is doing very well. Sorosfaces Congress over hedge funds' role in meltdown The quintet – including John Paulson, who made $3.7bn (£2.49bn) last year betting against the US mortgage market – were grilled over their roles in buying unregulated derivatives products, which some politicians believe contributed to the financial markets' meltdown. The men, who each earned more than $1bn each last year, were called to account by Democratic Congressman Henry Waxman, who chairs the House committee on oversight and government reform. Last I read, Soros was up $3-4 billion on his bets of a mortgage meltdown. |
| Posted by: ed 2008-12-16 18:36 |
| #9 Wonder how Soros is faring? A wipeout couldn't happen to a nicer guy. |
| Posted by: Danielle 2008-12-16 17:13 |
| #8 Nobody is going to feel sorry for the wealthiest 1% of Americans that use private unregulated investment vehicles to achieve jaw dropping returns by dubious means. That's the reality. |
| Posted by: bigjim-ky 2008-12-16 13:24 |
| #7 Risk - somebody wins somebody looses somebody breaks even.. 1/3 sounds fair. 1/3 win, 1/3 lose, 1/3 break even. |
| Posted by: 3dc 2008-12-16 13:19 |
| #6 Hehehehahaha, Wipe Out! |
| Posted by: GolfBravoUSMC 2008-12-16 13:13 |
| #5 Nice to see the Rantburg Populist Front is alive and well. |
| Posted by: Pappy 2008-12-16 12:59 |
| #4 Those cunning hedge funds! Bastions of rich money! They should be outlawed! No profit for you! Lawz. |
| Posted by: Mike N. 2008-12-16 10:17 |
| #3 ..is all air, just numbers in a spreadsheet. Which will be up and running again in the Donk sponsored carbon-tax scheme. |
| Posted by: Procopius2k 2008-12-16 07:16 |
| #2 That "1.5 trillion dollar industry" is all air, just numbers in a spreadsheet. Hedge funds don't create value, they game the system. It's a wonder that they're legal. |
| Posted by: gromky 2008-12-16 02:34 |
| #1 Cry me a river. What's the buy-in for a hedge fund? |
| Posted by: bigjim-ky 2008-12-16 01:16 |