US EAST COAST 2012 - HFMWeek

US EAST COAST 2012
I
t is no wonder that nine of the top 10 largest hedge funds
in the US are based on the East Coast. With estimated
cumulative assets under management of $1.3trn, the
country as a whole has seen unprecedented growth in
hedge funds. But the East Coast is particularly strong,
with more than $1trn of those assets distributed in
Connecticut, Massachusetts and New York.
The brains behind these hedge funds are themselves
under the spotlight. John Paulson, whose predictions
during the US housing bubble made him a star; Ray Dalio, founder of Bridgewater
Associates, the world’s largest hedge fund manager; and James Chanos, the Greek-
American president of Kynikos Associates considered one of the greatest shortsellers:
all East Coast hedge fund managers.
The trade, size and reputation of the region’s managers, however, are not the
only things making headlines on the East Coast. The challenges are significant
too. Waves of regulation require greater compliance and exhausting reporting
measures; investor confidence has been hit by lukewarm industry performance,
with increasing demands for transparency; while the market becomes more and
more cramped as competition increases. The start-up community is also struggling.
All are global phenomena. And all are felt keenest on the East Coast.
But it isn’t all gloom. The introduction of the JOBS Act will see the lifting of
the ban on advertising by hedge funds. This means private fund managers will be
able to publicly advertise services and solicit investors, assisting with efforts to gain
capital. Smaller funds, which have been at a competitive disadvantage against larger
funds, will particularly benefit. Also, technology solutions are developing at a fast
and furious pace. Hedge funds face greater pressure on IT costs and need to keep
on top of efficient data storage and reporting requirements.
Regaining investor trust through transparency, riding the waves of regulation
without getting lost in the complexity of reporting requirements, and getting to
grips with technology are just some of the topics covered by the array of industry
experts featured in the 2012 HFMWeek US East Coast report.
In many ways, the East Coast faces the same challenges as all the industry’s
managers. Widely considered the global sector’s preeminent force and innovator,
how it as a region approaches such hurdles will be watched with interest. Read on
for insight into the progress on show.
Roberto Barros
REPORT EDITOR
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