Anyone for hedgies?

14 November 2008 By Richard Beales Follow @richardbeales1

George Soros sometimes sounds overexcited. But in predicting that the hedge fund sector will shrink 5075%, the billionaire fund elder may not be exaggerating. The destruction, though, should eventually be creative, producing a more grownup industry.

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Hedge fund manager George Soros told a Congressional committee on November 13 that he expected hedge funds to manage 5075% fewer assets after the financial crisis than at the $2 trillion industry peak.

The average hedge fund had investment losses of 5.4% in October, for a 15.5% loss yeartodate in 2008, according to Hedge Fund Research.

Assets under management peaked in the second quarter of this year, with 7,652 funds managing $1.93 trillion, HFR reckons. At the end of the third quarter, 7,477 funds managed $1.72tr.

Anecdotal evidence suggests many funds are anticipating 2025% of investors' money to be redeemed by the end of the year, largely irrespective of performance.

Fortress Investment Group, for instance, said on November 13 that its liquid hedge funds, with $9.1bn under management at the end of September, faced a total of $2.6bn of redemptions, or nearly 30%, due to be paid between October and January.

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