Huge growth in store
As John Costas was preparing to leave his role as CEO of UBS investment bank to set up an alternative investment unit for the Swiss bank, he outlined some of his thoughts on the hedge fund business for Euromoney:
"My macro view on hedge funds is that there's huge growth in store. I'm not talking about between one quarter and the next, as there will always be fits and starts. I'm talking about over the next few years.
"High-net-worth clients are becoming increasingly sophisticated, and are looking for more customized information and products, and that is far from being realized.
"Meanwhile, hedge funds will become more transparent and identifiable with particular strategies.
"The recent low returns on capital at hedge funds is quite possibly the result of growth that outstripped expertise. But there's still a great deal of room to grow. Look at the equity market: in the 1980s only 17% of the US population owned stock. By the end of the 1990s that had hit 50%. Today hedge funds account for just 5% of funds under management.