Stock market on pace for worst December since Great Depression
The stars of the biggest hedge funds are losing their shirts as analysts fear a major financial wipeout is imminent.
From Ken Griffin’s Citadel, to Israel Englander’s Millennium Management, one big name after another is racking up negative returns lately, amid bad bets in a saturated market.
Over 11,000 hedge funds manage in excess of $3 trillion in assets. And hundreds of funds could be gone by next year, say insiders.
“Some sectors of the fund industry are crowded and competing with other investment vehicles,” said Nicholas Tsafos at EisnerAmper, who advises hedge funds.
There’s also a wide disparity lately in returns among managers chasing similar investment strategies.
“That alone should cause the number of closures to increase, as bad managers get fired and money is recirculated into those managers that do better,” said Don Steinbrugge, managing partner at Agecroft Partners, a hedge fund consulting and marketing firm.