I have written a column in the Weekend FT about the travails of hedge funds:
“Nothing in his life became him like the leaving it,” says Malcolm about the Thane of Cawdor in Macbeth. The epitaph could be applied to thousands of hedge funds that are, like Cawdor, facing execution.
The hedge fund industry, which enjoyed rapid growth in the first years of the century, is imploding. It took time for the financial crisis that started in banks and investment banks to work its way through to hedge funds. But they are now suffering on an epic scale.
Hedge funds that have invested heavily in illiquid assets have lost money rapidly in the past two months. That has encouraged rich investors, who are scared of the chaos in markets and want to hoard cash, to pull out their money at a record rate.
The panic is affecting not only small funds but some of the largest institutions in the industry – those that not long ago looked like rivalling troubled investment banks.
You can read the rest of the piece here and comment below.
