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Hedge fund launches pick up pace: Morgan exec

Date: Thursday, March 4, 2010
Author: Reuters

Managers are launching more hedge funds this year than last year at a time when pension funds and other wealthy investors are poised to put fresh money into these portfolios, a top Wall Street executive said on Wednesday.

"We are seeing very, very strong hedge fund formation right now," said Alex Ehrlich, who heads the prime brokerage business for Morgan Stanley. "The number of launches we are seeing are five times stronger than what we saw last year."

Morgan Stanley was voted the industry's top prime broker. Prime brokers help fund hedge funds, clear their trades and introduce them to investors, according to Institutional Investor.

Without being specific, Ehrlich said between 15 and 100 newly launched hedge fund firms will start working with Morgan Stanley this year.

The numbers suggest that portfolio managers and traders who are now working at banks or other hedge funds are still very eager to hang out their own shingles even as industry analysts report that it is becoming more difficult to launch these funds.

"We are as busy as we have ever been," Ehrlich said at the Reuters Private Equity and Hedge Funds Summit in New York.

Ehrlich said Morgan Stanley is winning back some of the clients it lost during the financial crisis in 2008, when concerns brought about by the collapse of Lehman Brothers caused some clients to move business away from major banks like Morgan Stanley.

"Many clients who felt they had to move business have moved business back to us," Ehrlich said.