What future for hedge funds? Revisiting capacity constraints


Pessimistic forecasts for the future of the hedge fund industry seem to be widespread.

Fuelling such bleak predictions is what has been called a disappointing year in 2004. There is allegedly one nagging reason for the decline - which is supposed to have already begun.

It involves the drying up of the sources of hedge fund performance; in other words, the disappearance of market opportunities. More precisely, these opportunities would be becoming rarer because of the increase in the number of