Bloomberg – We’ve been down this road before.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n