Hedge funds shakeout could be over by June

LUXEMBOURG Wed Mar 18, 2009 10:36am EDT

Thames River Capital Head of Multi-Manager Ken Kinsey-Quick speaks during an interview with Reuters at the Reuters Funds Summit in Luxembourg, March 17, 2009. REUTERS/Francois Lenoir

Thames River Capital Head of Multi-Manager Ken Kinsey-Quick speaks during an interview with Reuters at the Reuters Funds Summit in Luxembourg, March 17, 2009.

Credit: Reuters/Francois Lenoir

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LUXEMBOURG (Reuters) - A shakeout of the hedge funds industry could be over by June 2009, with nearly half of firms likely to shut up shop, a leading hedge fund manager said.

"The hedge fund bubble has popped and, unfortunately when any bubble pops, it's a painful process," said Ken Kinsey-Quick, head of multi-manager of hedge fund firm Thames River Capital.

"If half were to close down, I wouldn't be surprised. But the nice thing about hedge fund land is that things move very very quickly, it will probably be done and dusted by June," he continued

Hedge funds returns were a negative 19 percent last year, when investors pulled out a record $158.9 billion, according to data from Lipper.

Kinsey-Quick believes that only strong hedge fund models are likely to survive the financial meltdown.

"You will have only very robust models -- only the fittest will survive. But there is going to be some collateral damage. There will be some good players taken out," he said.

And he noted that the hedge fund industry was already adapting to meet the calls for greater scrutiny.

"Transparency has gone through the roof. Liquidity terms are beginning to match the liquidity of underlying assets," he said.

(Editing by Rupert Winchester)

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