Investors trying to get in on the nascent boom may find it’s already too late to put their money to work with the most promising money makers. This according to a recent article in Bloomberg.

The shift occurred rapidly. Only two years ago the investment  firm Brevan Howard was struggling to stop investors from yanking their money, but earlier this year it shut its flagship fund to new investors, along with a whopping 1,144 other hedge funds who have also slammed their doors.

According to Ivan Iliev, head of alternative funds at Julius Baer,“the best performers are dictating terms.”  Although only a small fraction of the world’s 8000 or so hedge funds are in that position. But after years of lackluster performance, and a brutal culling of more than 11,600 hedge funds, the volatility brought by the pandemic has spurred resurgent returns at some top funds. As the article contends, the divide between those funds at the top and everyone else has significantly widened.

In general, hedge funds are off to their best start since 1999. Last year, hedge funds also performed well, despite a deep stress test.  And though, according to the article, there’s a lot that can still go wrong – new Covid variants, tech stocks falling, or selloffs from China’s crackdown of its industry leaders – it seems investors are willing to overlook those risks. As long as managers continue “to stop investors from getting disillusioned and retain their confidence during inevitable periods of not-so-great performance,” says Aron Landy of Brevan Howard, this could harken a new Golden Era of hedge funds.

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