そうしたセルサイド（sell side）経験者達が、バイサイド（buy side）の運用会社であるヘッジファンドで活路を見出してきているのです。
＜Hedge funds need nothing but strategies＞
As discussed in the last post, hedge funds need nothing but strategies.
This is totally different from mutual funds that aim at “which stock or bond to buy?”
It sounds a bit extreme but individual asset classes are the only tools with which hedge funds realize their strategies to make money.
This is what I learned from a day-to-day operation in a hedge fund company.
Therefore, fund managers should have the ability and originality to develop such strategies with these asset classes.
Now, how do they develop originality?
First, it starts with experience.
As far as I know, most of the hedge fund managers have experiences to trade in the capital markets. They used to work for proprietary trading department to make money for investment banks, money center banks, brokers and so on. They are competitive professional players who survived in tough financial markets.
After Lehman collapse, both investment banks and brokers have contracted a riskier trading business in light of necessity of increasing capital adequacy and soundness of business. This is why the market department that was once a shining star is now fading.
Those traders found a way to revitalize themselves by moving to a hedge fund industry. At the same time, lenders have been gradually shifting from banks to funds, which are not required strict capital adequacy by monetary authorities.
Having said that, only selected players can be hedge fund managers because they should be able to develop niche strategies that are expected to make absolute returns all the time.
We often see a lot of fund managers that say, “I am very good at picking stocks”. Though, we seldom see a fund manager that says, “I can hedge a whole portfolio with lower cost by combination of financial futures than buying options. Please see this formula.”
Although I cannot write a concrete strategy of my company here, hedge fund management companies are always expected to adapt their strategies in order to live with the time and clients’ needs.