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Too many U.S. hedge funds - Agecroft Partners

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Published on Dec 15, 2014

TOO MANY U.S. HEDGE FUNDS - AGECROFT PARTNERS


Agecroft Partners Managing Director Don Steinbrugge says the hedge fund industry would be healthier if more closed.
SHOWS: NEW YORK, USA (DECEMBER 15, 2014) (REUTERS - ACCESS ALL)
1. AGECROFT PARTNERS, MANAGING DIRECTOR, DON STEINBRUGGE, SAYING:
JOURNALIST ASKING DON STEINBRUGGE: "Alright, so it looks like we are on pace to have a record number of closures in the hedge fund industry since 2009. That is not good news, so can you tell me a little bit about what you think happened this year and broadly why funds might have underperformed?"
STEINBRUGGE: "Well first of all I actually do think it is good news. Things are very different between now and back in 2009. In 2009 we just became off the implosion in the markets which caused the hedge fund industry to contract by 40 percent. 18 percent of that was due to performance, 22 percent from net redemptions from hedge funds. Well today the industry is much more stable, we are actually close to an all time peak asset -, we have seen $180 billion positive flow within the hedge fund industry. The reason I think these closures are good is I think we just have too many hedge funds. You know we have seen a lot open up, low barriers to entry, the average quality of hedge funds have gone down. We are up to 15,000 hedge funds, so far we have seen around 600 hedge funds close, I think it would be healthy for the industry if we saw more close. Because most of the ones that are closing are closing because they are not very good."
JOURNALIST: "Alright, that is an interesting point because it looks as if I have statistics from hedge fund research I think out of 240 hedge funds launched in the third quarter 200 of them liquidated already so you are saying that basically the weaks are being shaken out of the market?"
STEINBRUGGE: "Yeah, I think it a very competitive industry. And most of the money is going to a small number of funds that are demonstrating that they are the best across multiple valuation factors and those that aren't goo...

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