The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Too many hedge funds spoil the sector

Hedge funds regularly close or return money to investors, so the decision last month by David Muschel to return capital to investors in his Jemmco fund ought to have been unexceptional. But the explanation he gave gives pause for thought. Some of the fund's strategies, he said, simply cannot perform in today's environment.

He singles out decimalization, low volatility and ?enormous pressure to deploy capital to hedge funds that, once modest in size, have grown to billions of dollars in assets, many competing to exploit the same inefficiencies. I can see that the history of compressed opportunities is going to continue for more time than many of us have the patience to wait.?

Could it be that there are too many hedge funds? It could be merely a function of the low volatility that has beset the market for much of this year. But even when opportunities do come along there are so many players waiting to take advantage that spreads soon dry up. Merger arbitrage is a case in point. Fewer mergers and many more players have led to any opportunities quickly disappearing when mergers are rumoured or announced, although it is one of two strategies, along with credit structure arbitrage, that Muschel still sees value in and will still run.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree