Hedge funds make managers pull up their socks

Tuesday 27 July 2004

Hedge funds may have made fund managers pull their socks up - but the market is becoming overcrowded, says JP Morgan Fleming’s vice president of global portfolios Ed Walker.

By The Landlord

The London-based Walker says the boom in hedge funds is such that “Mayfair is virtually totally tenanted with hedge funds now.”

He told a Wellington gathering yesterday that the proliferation of such funds has meant, “people like me have had to sharpen up our act.”

“In the past, if you had dropped 10% but the market had dropped 15% you would be slapping yourself on the back. That’s a lot less easy to do now.”

However he says there are still risks attached to hedge funds and there is now an issue of quality control in that part of the market.

“The quality of people going to hedge funds is not what it was five years ago. The older ones have become institutions, but the smaller, newer ones are basically attracting people who want to go into the casino and put their money on red six.”

In an overview of the global investment outlook, Walker says the main sources of concern remain the (deliberately engineered) China slowdown, the jobless United States recovery, and European growth, which he characterises as “anaemic”.

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