Hedge funds to give up on fixed income?

The credit crunch continues to reverberate through much of Wall Street, eating away at jobs and forcing more writedowns at investment banks. One view was that hedge funds would stay in the game--given the performance of the likes of John Paulson. That may be true in some cases, but overall a lot of funds may soon start to capitulate. Breakingviews notes that SAC Capital, the giant $16 billion hedge fund, has cut back its fixed-income trading significantly, even letting go of some bond specialists. True, SAC is more of an equities shop, but it's fair to say that even hedge funds with more of a credit focus will be deterred by the kind of illiquidity we're now seeing. For bond traders, the hits keep coming.  

For more:
- here's the Breakingviews article

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