Bloomberg – We’ve been down this road before.
That’s the strong sensation that comes over me just about every time I happen upon some new status report on the growth and evolution of hedge funds.
Don’t get me wrong — hedge funds are no clone of anything else. These partnerships designed primarily for well-heeled, sophisticated investors are distinctly different from any other money-management vehicle.
If mutual funds are buses or minivans, then hedge funds are more like sports cars. They are faster, much more maneuverable – – and in most cases subject to proportionally greater risks.
For all their differences, though, the progress of hedge funds has taken them over much the same route traveled by mutual funds 15 or so years ago.
Mutual funds surpassed $1 trillion in assets at the dawn of the 1990s, and began attracting increased scrutiny from regulators and critics in the press. Hedge funds crossed the $1 trillion mark in the mid-’00s and, sure enough, acclaim started giving way to a more critical appraisal.
The early mutual funds typically showcased individual managers known for their idiosyncratic ways. Where are they now, the legends of yesteryear like Gerald Tsai’s Manhattan Fund — which burned brightly for a few years in the go-go 1960s, then flamed out? Today only scattered traces of the cult of personality remain.
