If last year’s big financial story was the return of the M&A market, then this year’s big story is the rise of hedge funds.
Hedge-fund investments reached nearly $1 trillion in 2004, according to the Hennessee Group, a hedge-fund investment adviser. With annual growth rates in the 30 percent range, hedge funds are becoming a driving force in U.S. and international capital markets. In some cases, arbitrage activity can make or break a deal, and as issuers and investors seek to understand the effects of the growing power of hedge funds, the capital markets themselves are changing.
