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Fund Managers Confident about Industry


Date: Thursday, April 17, 2008
Author: Chidem Kurdas, New York Bureau Chief, Hedgeworld.com

NEW YORK (HedgeWorld.com)—The economy may be in a recession, but the hedge fund industry is moving ahead like the Energizer Bunny—at least, that's the general feeling of a group of fund managers polled in study from accounting firm Rothstein Kass.

In interviews conducted this month, more than 90% of 306 senior partners at U.S.-based hedge fund firms said they expect significant new money will come to hedge funds this year. Slightly less than 75% said they expect more hedge funds to be launched in 2008 than in 2007. Only about 25% predicted that more funds would close this year compared to last year.

"What we discovered is that while nearly two-thirds of respondents have a generally negative outlook for the U.S. economy, during the balance of 2008, the vast majority of senior hedge fund managers are unfazed by ongoing volatility," said Howard Altman, co-managing principal of Rothstein Kass, in a statement.

But these managers are concerned about establishing their brand—nearly 90% said marketing will become much more important for hedge fund success. Another concern is staffing: Around 75% of the respondents indicated that it will be harder to attract and retain talented people.

The managers were split as to whether more hedge funds will become involved in private equity in 2008. But the vast majority appear convinced that hedge fund fees are holding steady—a mere 1% said fees will go down in 2008.

Mr. Altman also pointed out that hedge funds likely will become more expensive to operate, a view expressed by more than 66% of the survey respondents.

Small and medium hedge fund firms accounted for a large part of the manager sample, reflecting the structure of the industry. More than half of the firms in the survey had total assets between $100 million and $750 million and the rest had more than $750 million.

CKurdas@HedgeWorld.com