The capacity question

tracy pearson

Many commentators believe the hedge fund industry is faced with increasing capacity constraints, but to what limits are they referring? We suggest discussions of hedge fund capacity should consider a number of issues, including; the level of trading opportunities in a particular strategy; the total number of players in a strategy; as well as concerns at a fund level, such as resource constraints.

Over time, numerous industry surveys have taken a shot at estimating capacity. In 2001, a survey