Small hedge funds head for closure say experts

(Bloomberg): As much as 20 percent of hedge funds globally may be liquidated by the first quarter because smaller managers are starved for fees and new capital, according to Merrill Lynch & Co. Hedge fund managers overseeing less than $100 million may be the worst hit, said Justin Fredericks, New York-based head of US.capital introductions, a prime brokerage team that brings together hedge funds and potential investors. Hedge funds globally returned on average 1.65% according to Hedge Fund Research Inc., headed for the third-worst annual return since the Chicago-based company started to track data in 1990 on concern that the recovery in economic growth may falter.

About 93 percent of the $9.5 billion net inflows into the industry in the second quarter went to managers overseeing $5 billion or more, said HFR.