Doing a round of spring cleaning and came across some blog posts that I had saved to publish later. If they are relevant then I will post. This one is, so I will.
Reuters Summit: New Opportunity for Would-Be Hedge Fund Investors
Reuters
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More news from the Reuters Summit:
After years of being told “no,” investors may finally have a shot at putting money with the hedge fund industry’s best managers.Last year’s industry shake-up has forced many funds to open their doors to new customers, said Girish Reddy, managing partner at Prisma Capital Partners.
“There is a lot more capacity available with high-profile managers now,” Mr. Reddy said at the Reuters Private Equity and Hedge Funds Summit in New York on Tuesday [March 24].
This means that even the industry’s biggest funds are a lot smaller now and are ready to consider taking new customers.
“Dislocations have been created through the redemptions,” Mr. Reddy said.
While the time may be ripe for investors to find space with the best managers, it may not be an ideal time for starting new funds, he added.
A number of prominent managers, including John Paulson’s long-time associate Paolo Pellegrini, are trying to start up their own funds.
“Big names will help, experience will help. But even then, people will generally be less excited to go with a new player,” said Mr. Reddy, who selects hedge fund managers for his clients.
In the wake of last year’s worst-ever hedge fund industry returns and string of prominent frauds, pension funds and other investors who continue to rely on hedge funds will be more skittish than ever about trying something new, he said. “It will be very challenging to get access to capital.”
Mr. Reddy said he expects the upheaval in the hedge fund industry will abate in the coming months; he also sees redemptions, which were a big theme last year, beginning to fall off.
Industry experts say more will be known about the size and scope of investors’ demands to get out of hedge funds on April 1, after a withdrawal deadline at many funds has passed.
“A lot of the redemptions have been done,” Mr. Reddy said, adding “I expect them to be lower now.”
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