Wednesday, October 10, 2007

Hedge Fund Seminar Data Points - Day 1

Every Hedge Fund/Alternative Investments seminar I conduct produces a wealth of useful and insightful information. Last night’s kick-off event in Tampa was no exception.

The first points of value I wish to share comes via Tim Hayes the highly regarded Chief Investment Strategist from the equally highly independent research firm, Ned Davis Research. In Tim’s excellent handout are three data points (among many) that I found particularly interesting:

* Of 7,300 hedge funds, the largest 200 account for 75% of hedge fund assets. 40% of hedge funds don’t last five years. (source McKinsey & Company)
* A Greenwich Associates survey indicates that during the next three years, 34% of U.S. institutional investors plan to increase their investments in private equity, 22% to increase investments in hedge funds.
* At the end of September 2007, monthly dollar flows into Exchange Traded Funds by hedge funds reached a record $19.9 billion, eclipsing August’s record at just over $14 billion.

Three initial conclusions reached by all three of my seasoned and well experienced expert panelists (which included D. Scott Luttrell of LCM Group and Daniel O'Conner of M&I Investment Management) is that high end, high quality hedge funds will weather the storm quite well, with many exploitig the misfortunes of their lesser talented peers; for most investors, sticking with the better run, better disciplined fund of funds managers is superior to selecting individual hedge fund managers (the data supports this view); and that the effects of the recent credit crunch will be felt more on existing deals and private equity.

I will provide today's two events and their insights and comments in tomorrow's blog entry.

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