Capital is likely to continue to flow into hedge funds but the global annual inflow may be less than last year's $200bn (€152bn), according to recent surveys. US institutions, the principal source of new capital for the hedge fund industry, are likely to invest between $40bn and $100bn a year in the asset class, lower than in previous periods.
A rate of inflow that is slower than last year's would ease fears of overcrowding. Watson Wyatt, an investment consultant, estimated this month that existing top-tier hedge fund managers â those in the top 5% to 10% â have capacity for only $150bn more, while new top-tier managers are likely to bring extra capacity of only $50bn a year.
