Yet another hedge fund conference, yet another 2,000 participants still looking for the elusive investor—are there any out their anymore? Th...

Yet another hedge fund conference, yet another 2,000 participants still looking for the elusive investor—are there any out their anymore? The merry-go-round goes around and around all over the globe. That is nothing new. But have there not been some changes over the years? Well, the ratio to those wearing trainers to those still attired in suits has changed over the last 10 years. There is no coming back: hedge funds are mainstream—at least today, most in the sector dress like mutual fund managers. Could the suite to trainer ratio have something to do with why returns are coming down in the hedge fund world? Face it—from the rocket scientist pedestal of ten years ago—the average peddler of hedge funds today is likely to have had only three years experience. He or she resembles those selling internet-related equities five years ago. The same type that peddled futures and options 10 years ago, international equity 20 years and investment funds 30 years ago (Few probably are old enough to remember the discussions about mutual funds being a break-thorough investment concept). I concede, those $100 000 a year new MBA graduates have to be employed somewhere, but do they all need to be employed in hedge funds? Some of the first waves of hedge fund pioneers were lucky to strike it rich, but these guys have since moved on and many others who worked in the sector not so lucky have also moved on. Today, there are too many of the inexperienced fresh-faced MBA graduates in the industry. That creates the danger of a bubble. The “small chosen few”, the “in-crowd” feeling have gone from the hedge fund industry. We see the passing of the pioneering age of hedge funds with the onslaught of “democratization” of the sector. Today, there is no question anymore about the convergence of hedge funds and mutual funds—it is happening. The slow but crushing regulatory factors are driving hedge funds to become “traditional” investment vehicles. Increasingly, they look and behave like all other mainstream asset classes. As the increased focus on risk drives hedge funds to a common behavioural pattern, the day of a hedge fund being an active risk taker will look indistinguishable from that of mutual funds which track error risk. And soon the discussion about traditional versus non traditional investment will have little more relevance that marketing types doing their very best to tell investors the differences between the two when there is little. And, astonishingly hedge funds seem to be embracing the regulatory mechanics as part of a bigger game. May be they see onshore acceptability as a way to make even more money. But could we see some hedge funds about to change into something different. Eager to get from triple billions to single trillions hedge funds could just change into something different, which could just preserve their non-domesticated animal features. There is always hope.