A CAIA post shows that private capital firms now outnumber hedge funds. In fact, the number of hedge funds has declined over the past decade. Hedge funds are not a growth business. This can be associated with the rise of multistrategy firms that will pick up talent in pods, as opposed to investing in individual firms. This has not happened in other areas of alternative investing. The performance across hedge funds is tighter than other alternatives, even though there are significant differences in strategies.
The hedge fund industry is undergoing consolidation, with higher start-up costs and increased operating expenses. You have to ask whether someone wanting to start a hedge fund is a little crazy.
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