Times Online – CRISPIN ODEY, one of the grandees of the London hedge fund world, said yesterday that the industry could be doomed, likening it to the disaster that was the Lloyd’s of London insurancemarket in the 1980s.
Most hedge funds had enjoyed the massive benefit of cheap money and would be found wanting by the coming era of rising inflation and interest rates, he suggested.
In a largely negative critique of the industry, Mr Odey said that hedge fund managers would struggle to adapt to the changing environment: “The hardest thing to do is to think in a different way to the crowd, but in an inflation world, hedge funds get killed.â€Â
Lloyd’s imploded when people realised that the participants were hopeless at underwriting risk, he said.
Mr Odey also took a pot shot at funds of hedge funds  the pooled investment vehicles favoured by institutional investors  as “box-ticking organisationsâ€Â. He said: “If they (hedge funds) rely on funds of funds, it’s a doomed industry.â€Â
