Experts warn not to bank on hedge-fund gold rush

| 13/01/2011

(WSJ): A sign the financial world may be returning to normal hedge -fund start-ups in 2010 reached the highest level since the boom, with 715 new funds launched in the first nine months of the year, according to Hedge Fund Research. But would-be hedge-fund tycoons shouldn’t get their hopes up. The industry is seeing net inflows after two years of bleeding assets, with a strong uptick at the end of last year. Pension funds are increasing allocations. But many of last year’s launches were new funds created by existing managers. For all but a handful of stars, starting a new firm is much tougher now than it was during the boom. The biggest challenge is that many hedge funds are struggling to demonstrate the outperformance required to justify their fees.

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