LONDON (Reuters) – Hedge fund industry figures dispute the idea that a flood of money into the sector from pension plans and other clients is cutting overall returns by overcrowding the market, saying recent economic conditions are the main culprit.
These free-wheeling portfolios can use techniques like short selling — betting that a price will fall — to make money in all markets, a tactic that found particular favour when the dot-com boom in stocks ended in 2000.
Led by big institutions in the United States, retirement schemes, college endowments and charities piled into hedge funds, taking total assets under management above $1 trillion (570 billion pounds), and this is expected to surpass $2 trillion in the next decade.
But some commentators fear the growing popularity of hedge funds is dragging returns down.
