MUNICH, Germany (HedgeWorld.com)–An “activity report” published by the alternatives unit of HVB Group identifies a number of major trends in hedge funds, both on the investor and the manager side of the industry.
“Hedge funds will become mainstream within the financial services industry, because they introduce a compelling new money management paradigm,” wrote Rudolf Nemetschke and Alexander Schweickhardt, members of the board at HBV Alternative Investment AG, in their introduction to the report. “The traditional and alternative asset management industries might merge.”
They argue that concentration will become a dominant force as the industry matures because larger firms with deep infrastructure are better able to meet the standards of institutional investors. Another study has found that the critical asset size for a hedge fund of funds is US$1 billion. The minimum necessary for success is growing and by late 2003 could be up to US$2 billion.