Global Scenario
The Hedge Fund industry has captured over US $ 2 trillion in assets globally by the end of year 2006. According to an investor survey revealed for the Hedge Funds, the US remains the favored destination for investment and accounts for 62 percent of the total Hedge Fund assets, followed by Europe (26%), Asia Pacific (10%), and others (2%)[6]. The great demand for the alternative investment has favored Hedge Funds most specifically among institutional investors because they fit in their alternative investment prospects and generate high returns. Interestingly, most Hedge Fund investments come through fund of Hedge Funds, which account nearly about 50 percent of the total funds. These funds give access to retail investors for large and closed funds with quick liquidity. The number of Hedge Funds has grown exponentially with estimates made that over 8400 Hedge Funds and more than 2100 Fund of Hedge Funds are actively managing assets of investors worldwide. According to the Hedge Fund Intelligence first global review, there are more than 350 Hedge Funds managers who manage around $1 billion.
The fabulous growth of the emerging markets is attracting the Hedge funds. Emerging markets Hedge Fund sector provides investors who have entered the industry for the benefits of diversification, large economic growth prospects and developed financial system. Asian Hedge Funds account for 10 percent (2 percent in 2000) which of the total world assets in Hedge Funds have shown a growth rate of 50 percent per annum in the last five years.
Moreover, the Hedge Fund managers are having substantial interests in the recent buyout deals and are threatening to give competition to private equity funds.
Dow Jones Newswire reports that Hedge Funds increasingly desire to leave their stakes in companies that have gone private rather than liquidate investment to make short-term returns. They remain invested to boost returns with longer-term prospectus.