Hedge Fund Managers Expect to Bounce Back

July 6, 2010 (PLANSPONSOR.com) - Results of a recent survey suggest that the hedge fund industry continues to steadily recover from the global market crisis that began in late 2008, as more than 82% of respondents predict there will be more fund launches this year than in 2009.

However, nearly 70% of survey participants indicated that hedge fund launches in 2010 will be smaller than before the credit crisis. Approximately 71% of hedge fund managers expect hedge funds launching in 2010 to be more reliant on seed capital.  

Conversely, fewer than 20% of survey participants believe that more funds will close this year than in 2009, according to a press release.   

“While nearly 70% of hedge fund professionals we polled still expect 2010 to be a difficult year, there are signs that conditions continue to improve. However, it is clear that the crisis has had a profound impact on the sector and its practices. Stung by fundamental misunderstandings regarding the nature and objectives of hedge fund capital pools, the community has responded by taking steps to offer greater transparency and enhance educational initiatives,” said Howard Altman, Co-CEO and Co-Managing Principal of Rothstein Kass, in the announcement. “Though more than 73% of those polled agreed that the pace of redemptions will continue to slow this year, the industry continues to absorb lessons from a period of intense demand for liquidity.”  

“2010 Hedge Fund Outlook: Back to the Future?” found that more than 67% of hedge funds surveyed plan to raise additional investment capital this year, with larger established funds more likely to attract assets from pensions, endowments, and benefit plans.  

Additional findings include: 

  • 80% of firms surveyed indicated that hedge funds will use significantly less leverage than prior to the crisis, 
  • Roughly 58% of respondents anticipate downward pressure on hedge fund fees, 
  • Nearly 77% of survey participants expect there will be increased regulation of hedge funds, 
  • 47% expect the bulk of regulatory changes to take effect this year, while 52% indicate the changes are more likely to take place in 2011.  


The report features the findings of a survey of senior managers at 381 hedge fund firms conducted between February and April of 2010.