Posted by & filed under Hedge Fund Assets.

Morgan Stanley offers its forecast on the hedge fund AUM trajectory.  From Hedgeworld.   



Hedge Fund Assets Seen Down 37% in ’09: Analyst
By Reuters
Monday, January 26, 2009


NEW YORK (Reuters)—Tough times may not be over for a hedge fund business that suffered big losses and saw total assets shrink by about a third last year, a leading analyst said on Friday [Jan. 23].


Morgan Stanley analyst Huw van Steenis told clients that hedge fund assets may fall below $1 trillion this year—down about $450 billion to around $900 billion. The 37% decline will be fueled by withdrawals and further market losses, he predicted.


Last year, during one of the worst years ever for financial markets, hedge funds lost $600 billion in assets. That was roughly one-third of what they started the year with, Mr. van Steenis said.


The biggest redemptions will be generated by funds of hedge funds, he said, though a number of endowments will cash in shares to fund private-equity commitments.


Efforts by some managers to close their “gates” and block redemptions “is likely to backfire” in the coming year, he said.


Mr. van Steenis also said Morgan Stanley, an investment bank that has been expanding its hedge fund offerings in recent years, is “more exposed to hedge fund shrinkage” than many other firms.


By Joseph A. Giannone


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