2014 May Be the Year of the Hedge Fund Startup
The financial industry is proving a fertile space for startups, with a host of new hedge funds beginning operation this year.
According to the The Wall Street Journal, 2014 is looking like the busiest year for hedge fund launches since the 2009 financial crisis. Many of the new ventures have been founded by managers of well-known funds, including Herb Wagner of The Baupost Group, Matthew Sidman of Highfields Capital Management, and Jim Parsons of Viking.
Some of the new funds may get a boost from the Securities and Exchange Commission, which loosened its "general solicitation" rules under the 2012 JOBS Act last fall, allowing hedge funds to advertise their services in the media.
With the change in the SEC's rules, hedge funds are removing their image of exclusivity, The New York Times reports. Now some funds are buying ads, such as Balyasny Asset Management's half-page spread in the financial newspaper Pension & Investments showing snowboarders on the side of a mountain.
"The JOBS act rules have permitted investment managers to feel more comfortable about branding their business more generally," Jay Gould, a hedge fund lawyer at Pillsbury Winthrop Shaw Pittman, tells the Times.
The hedge fund market has been heating up recently, in January recording the best monthly returns compared with U.S. stocks in more than 18 months, the WSJ reports. Last year, hedge funds managed a record $2.6 trillion, up 17 percent from 2012, research firm HFR tells the WSJ.