Financial News Online US- A few years ago, this column wrote about problems at the little known but ambitious US hedge fund Hubris Capital Management LLC and the strong performance of its flagship funds Nemesis and Icarus. While the firm did not, of course, exist, it might as well have done given the collective hubris in the hedge fund industry over the past few years that looks like it may now be coming home to roost.
The industry’s highly developed sense of confidence in its own genius has been demonstrated in the past few years by the steady flow of untried hedge fund managers who were able to launch new funds with higher fees and more restrictive liquidity requirements than many of their established colleagues. The sheer weight of money piling into the sector, the huge rewards on offer to hedge fund managers and the limited supply of successful funds that were still open to investors, created a virtuous circle.
But since the credit crisis burst on to our trading screens last summer, this halo has been slipping. Last year, for the first time since at least 2000, the number of new hedge fund launches in Europe and the value of assets such funds attracted fell, according to figures released last week by specialist industry publication EuroHedge.
