LAUNCHES OF NEW HEDGE FUNDS ARE RISING, SAYS INFRASTRUCTURE PROVIDER

Posted June 1, 2009

NEW YORK — Hedge fund launches are increasing, according to Jayesh Punater, Chief Executive Officer of Gravitas Technology, a hedge fund business and infrastructure technology provider.

“The ice is thawing,” says Punater. “We have not seen this level of new fund launches since 2004.”

In the first quarter of 2009, Gravitas met with 19 start-up funds, most of which launched with $5 million to $125 million in assets. The number of launches in the current quarter is so far outpacing the first quarter, Punater says, with more funds launching in the $250-500 million range and a few funds expecting to launch with over $1 billion in assets.

In addition, Punater says that hedge fund managers are focusing on a new set of business factors as they launch, namely scalable or variable costs, reducing real estate overhead, running smarter rather than bigger funds, focusing on business as well as investment success, outsourcing non-investment functions, and independence.

Punater sees funds providing more transparency and seeking balance between the investing and investor relations functions. “Hedge fund managers need to put as much time into client service as they put into portfolio management,” he says. “Responding to the increased demands of investors, to whom the balance of power has shifted, will be critical for this new era of funds.”