Hedge Fund Management Industry Overview

Companies that provide the management and sale of hedge funds.

Summary

Not long ago, hedge funds were perceived to be strange, convoluted investment pools open only to the very rich (and strong of stomach). The spectacular collapse of multi-billion dollar hedge fund Long Term Capital Management in 1998 underscored the funds’ volatility.

Full Hedge Fund Management Industry Description

Credit Risk Transfer from Banks

Because of the appetite of hedge funds for high-yielding investments, banks and investment banks have been able to transfer credit risk from illiquid loans they previously had to hold themselves. By securitizing such illiquid loans and selling the high-yield, high-risk tranches to hedge funds, banks have reduced the amount of credit risk they hold. Hedge funds now hold the credit risk for many illiquid investments, such as commercial loans and sub-prime mortgages.

Full Hedge Fund Management Industry Trends

• ABC arbitrage
• Alternative Investment Strategies Ltd.
• Angelo, Gordon & Co.

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Hoover's has developed its own industry classifications to better serve its customers. These classifications are mapped to the North American Industry Classification System (NAICS) and the older U.S. Standard Industrial Classification (SIC) system. The Hedge Fund Management maps to a number of NAICS codes including:

Full Hedge Fund Management Industry Codes

• Financial Services Technology Consortium
  
• Investment Company Institute
  
• The Association of Private Client Investment Managers and Stockbrokers
  

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