Quantum Co-Founder Pessimistic Over Prospects For Hedge Fund Industry

by Phillip Morton, Investors Offshore.com

02 December 2004

Jim Rodgers, co-founder of the Quantum hedge fund with George Soros in 1970, has told a conference that performance in the industry has reached a peak because hedge fund talent has spread itself too thinly and equity and bond markets will be difficult to trade over the coming two decades.

Addressing a Tokyo hedge fund gathering, Rogers predicted that hedge funds and funds of hedge funds will struggle to make money from stocks in the next 15 to 20 years, while bond markets “will be doing horribly.”

Rogers, who retired some years ago and these days describes himself as an 'adventure capitalist' and 'investment biker' commented: “I'm told there are almost 10,000 hedge funds today; with overcrowding there will be some charlatans and incompetence, and you can't have that many smart 29-year-olds around.”

He also noted that many hedge fund managers made their reputations during the bull market of the late 1990s, and forecast that many will struggle to replicate this success in future years.

According to Rogers, the markets likely to bring the best returns in the longer term will be commodity markets which tend to experience long trends lasting twenty or so years, while China will be the most profitable country in which to invest.

“Most commodities like sugar and coffee remain at low prices, even oil, if it's adjusted for inflation, remains 50 percent below its all-time high,” he observed.

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