Cayman Hedge Funds Crest 10,000

Jul 29 2008 | 11:09am ET

The world’s most popular hedge fund domicile continues to grow this year, but one prominent hedge fund manager does not expect it to last.

The number of hedge funds registered in the Cayman Islands rose 6.6% in the first half, with 624 funds and funds of hedge funds registering in the tax haven since the end of December. There are now 10,037 funds domiciled in the Caymans, the first time that number has exceeded 10,000, according to the Cayman Island Monetary Authority.

But Phil Duff of hedge fund Duff Capital Advisors expects the industry to shrink for the first time this year, with more funds closing than launching.

Speaking on CNBC, Duff said he expects the number of hedge funds to shrink this year, though so far more hedge funds have debuted than disappeared in 2008. But he remains bullish on the industry in the long run.

“I think hedge funds will take over a lot of the roles of investment banking in the basic function of intermediating capital and intermediating risk in the marketplace,” he said. “I do think there will be more regulation, and I view that as a good thing.”

“The reality is the vast majority of hedge funds frankly are considerably less risky than owning a large, diversified portfolio of common stock,” he added. “Perception and reality aren’t always the same.”


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