Barclays debunks popular theory on why hedge funds are struggling

London

BARCLAYS Plc has just debunked one of the most common narratives for why hedge funds are struggling to repeat the glory years. They found it is not the number of funds that's causing returns to languish. It's their size.

That upends a piece of wisdom so well received that even the industry itself has started to repeat it. Barclays polled 340 investors with about US$8 trillion in assets under management, and 74 per cent of them said the primary reason for meagre returns is that the industry itself has become too big. In fact, Barclays found, the malaise is much more likely to be a function of the fact that funds themselves are growing larger, and can't take the nimble gambles that generated high returns for them in the past.