Financial storm hits hedge funds hard

Mon Sep 29, 2008

Hedge funds were not in the eye of the hurricane that swept through Wall Street last month, flattening Lehman Brothers, nationalizing American International Group, Fannie Mae and Freddie Mac and turning Morgan Stanley and Goldman Sachs into banks. But the damage left in the storm's wake is likely to batter hedge funds for some time to come.

The NYSE is bracing for a down year, as are many managers

Performance was already on track to make 2008 one of the worst years in recent memory, and hedge funds had been bracing for redemptions by hoarding cash and deleveraging. With markets so uncertain and the government in charge amid a heavily politicized atmosphere, funds are reluctant to step back in. "Managers are shell-shocked right now," says one institutional investor. "For some hedge funds, their model is going to have to change, too, whether its return expectations or the breadth of...

ISSN: 2151-1845 / CDC10004H

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