Worst not over for hedge funds
The worst is not over in the hedge funds sector, with more collapses likely this year, according to the head of the Bank of America’s alternative investment group, David Ballin.
Ballin told this week’s Reuters Hedge Fund and Private Equity Fund Summit in New York that the hedge fund collapses would come as managers struggled to borrow the new money they needed to trade and in the wake of customer disappointment in the returns they generated.
“Some funds simply will not do well, particularly those specialising in fixed income markets,” he said.
Ballin said that the pressure for hedge fund managers was two-pronged with investors hastily handing in redemption notices to get their money out while bankers were getting stingier with loans after having to write down billions in bad debt.
“If this condition lasts for a long time then it could dampen returns,” he said.
Ballin said Bank of America had fired roughly 15 per cent of the hedge fund managers it uses and that if other large investors were also scrutinising their managers, this could hasten the pace of potential collapses.
AUTHOR
Mike Taylor
Recommended for you
The latest budget papers have outlined a $10 million provision for ASIC greenwashing enforcement activity as well as funds for a sustainable labelling regime to be partially met by industry levies.
Betashares has expanded its fixed income solutions with the launch of a new ETF offering exposure to subordinated bonds issued by the big four Australian banks.
The latest monthly Bank of America global fund manager survey has found investors are starting to shift cash into bonds as cash allocations reach a three-year low.
AUSIEX analysis has discovered the net traded value of Australian dollar fixed income ETFs more than doubled from January to April, reflecting growing investor demand.
