07-12-2020, 10:22 AM
(07-11-2020, 11:44 AM)Shreya6 Wrote: This may actually help in reducing volatility in market, especially because there are many investors, both retail and institutional, that act and rely heavily on the movements that hedge funds create. Another point that should be noted is that hedge funds are not open to any investor and so those that have the ability to invest with hedge funds will still have the transparency of investment decisions that the hedge fund undertakes.
I do agree that this will help in reducing the volatility in the market. But, it does seem to make investors in hedge funds restricted to the fund they are investing in since they will lack the information on other hedge funds for potential investments. This reduction in transparency will make investors think twice before they begin investing with hedge funds, all but the large ones. So maybe we could see a convergence of investors to invest only with the big, transparent hedge funds, which could possibly decrease the holdings of smaller hedge funds.