Merrill Lynch: 20% Of Hedge Funds Could Be Doomed

Sep 21 2010 | 9:37am ET

Consolidation isn’t the only force likely to shrink the hedge fund industry, according to a new report.

Bank of America Merrill Lynch predicts that as many as one in five hedge funds could be liquidated by next year. The culprit? A brutal fundraising environment in which investors increasingly prefer larger hedge fund managers.

“Going into the year-end, there will be significant closures and we estimate it could be as high as 20%,” the firm’s Justin Fredericks told Bloomberg News. “A large portion of managers are still below high-water marks. Performance is flat and money hasn’t been flowing to smaller managers.”

Hedge fund managers running less than $100 million are the most likely to be affected by the hedgicide, Fredericks, Merrill’s head of U.S. capital introductions said.


In Depth

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Star Mountain: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of