The new hedge fund industry

November 23, 2009 | By Jim Kim

The hedge fund industry looks surprisingly strong right now. One could argue that the financial crisis has led to some changes that are setting up the next era of prosperity. According to the New York Times, a new focus on transparency, more flexible fees and other investor-friendly trends will combine "to deliver superior risk-adjusted returns for investors in the asset class."

In addition, the recent consolidation "has concentrated talented managers into fewer firms. As firms continue to liquidate, the industry should be well-positioned to redistribute and integrate its most talented professionals." On top of this, it doesn't appear that funds face draconian new regulations. Certainly, we're seeing some top funds fight back. Citadel is a good example. Other funds are expanding into new areas. John Paulson, for example, has launched a new gold fund. Inflows seem to be picking up, but the days of easy start-ups are over--that may be a good thing.

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