Have Hedge Funds Been Clipped?

New York Times

If you're a physician-investor who hasenjoyed riding the hedge fund wave of thepast few years, the tide is about to go out.After 2 years of sharp growth, interest inhedge funds is on the downslide. Accordingto the , a study byDeutsche Bank's hedge fund group findsthat investors are estimated to pour about$40 billion into hedge funds over 2005,which is a mere one third of the amountinvested in 2004. In 2001, although theS&P 500 dropped 11.9%, the CSFB/TremontHedge Fund index returned 4.42%.But in 2004, the market increased 10.9%,while the hedge fund index only gained9.6%. Around 60% of investors polledstated that the large amounts of moneydumped into hedge funds over the pastfew years will mean lower long-termreturns. However, the hedge fund outlookis brighter in Asia, as 73% of those polledsaid that they will put more money intofunds located in that region, excludingChina and Japan.