2007: Year of Hedge/Mutual Fund Convergence?
| Jan 16th, 2007 | Filed under: Hedge Fund Industry Trends | By: Alpha Male |
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We’re only a few weeks into 2007 and there seems to be an inordinate amount of buzz about mutual funds that are able to pursue non-traditional (read: “hedge fund”) mandates.
This article by Murray Coleman of Dow Jones MarketWatch suggests the phenomenal growth of long/short mutual funds in 2006 will continue into ‘07. Says Coleman:
“The amount of money going into dedicated long-short mutual-funds has doubled in the past year. By the end of 2006, the category had attracted nearly $6.3 billion in net assets, according to Lipper.”
Long/Short or “Long-Then-Short”?
This seems encouraging on the surface. But the rest of this article leaves us a little concerned.  The piece continues:
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[...] We have recently posted on a couple of stories regarding a new breed of “hedged” mutual funds that has emerged as US mutual fund regulators relax rules governing short-selling. In this well-timed research paper academics from the London Business School, Georgia State, Northeastern University in Boston crunch some numbers to get a handle on this phenomenon. They use data from Morningstar and Lipper (both of whom seem to be preparing for an arms race in hedge fund reporting). [...]