While reporting an almost universal desire to raise new capital, the vast majority of senior hedge fund managers are anticipating that 2009 will be a difficult year for the industry.
According to a new Rothstein Kass report, 83.7% of survey participants expect that competition for hedge fund investors will dramatically increase, with new investors expected to represent the primary source of new capital to the sector. Amid rising operating costs and an enhanced regulatory focus on the industry, 79% of senior professionals also agreed that hedge funds will revert to being a niche investment class.
The majority of survey respondents anticipate that competition for investors will dramatically increase and that hedge funds will be much more costly to operate. Sixty-two percent also predict that M&A and restructuring activity among hedge funds will boom and 98.7% of hedge fund managers expect that there will be increased regulation of hedge funds. And 61.1% of respondents reported that their personal net worth had decreased by 30% or more.
“While managers recognize that enhanced transparency has the potential to increase operating costs, many are broadly supportive of increased regulation,” said Howard Altman, co-managing principal at Rothstein Kass. “They recognize that legislation may help to restore investor confidence, leading to renewed asset flows over time.”
The survey was based on telephone interviews with 239 hedge fund senior partners at U.S.-based hedge fund organizations with at least $100 million under management and no less than five years in operation.