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The year hedge funds grew up
- 2024 marked the shift of hedge fund industry towards institutionalization with the investor base shifting to long-term institutions and hedge funds becoming institutions of their own.
- The major firms and new launches have evolved significantly with built-out infrastructure and leadership teams, which ensure the survival of these giants in the industry.
- Multistrategy managers like Millennium, Citadel, and Point72 have also moved towards this direction with built-out infrastructure and leadership teams, which ensure the survival of these giants in the industry.
- Most of these firms are set to outlive their founders with long-standing funds becoming more formulaic and bureaucratic, which points to a world where giants outlast their larger-than-life leaders.
- Succession, quality launches, and a promising environment for active managers due to increased volatility have shed light on the hedge fund industry being in a strong period.
- The next generation of industry leaders are starting their firms with a much more institutional feel than five years ago.
- The average fund launched with $300m in 2023, driven by a focus from allocators on "quality" launches, with institutional investors such as pensions, sovereign wealth funds, and endowments helping hedge funds to shine.
- Long-time industry players and investors believe that hedge funds are increasingly looking more like peers in private equity, as they are becoming more centralized with internal structures providing hierarchy.
- It is expected that the hedge fund industry will continue to show growth as a result of the increased volatility that is allowing active-managed investment firms to shine.
- Industry observers are looking at 2024 as the beginning of a new era for hedge funds with the shift to institutionalization.
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