Hedge Fund Blow Ups – Any Day Now!

Yesterday I was speaking at a hedge fund conference. On a discussion panel with me were some very eminent hedge fund managers. When asked their returns all of them said ten, 15, 20 percent this year. Perfectly normal numbers. It seemed strange to hear such normal numbers at a time of such abnormal markets.

Maybe that was because the specially picked panel was made up of sensible and respectable managers, those who would do well, and importantly, act conservatively, whatever the state of the markets.

But such managers are unfortunately rather rare.

While highly regulated banks can collapse any day of the month, hedge funds tend to report their performance on a monthly basis and can sometimes cling on to life, limping along until they can keep the sorry state of their business secret no longer. With the wild swings in the market of late it seems reasonable that it won’t be too long before we start hearing about the collapsing of hedge funds, and maybe some big names among them.