Recent market offerings for new hedge funds indicate a very strong appetite for these alternative investments as shown by the successful initial public offering by British master investor Brevan Howard. Just this week, he successfully raised about US$1 billion for his new BH Macro Fund, double the original amount of US$500 million he had initially estimated. Mr. Howard has a total of US$18.50 billion in AUM (assets under management) and his 4 other existing funds showed impressive growth figures since last year.
New areas explored by hedge funds lately are convertible bonds (a debt security issued by a firm that pays interest and can be converted into stock shares at maturity) and also direct lending to small- and medium-sized businesses which are normally the sectors controlled by banks. Hedge funds are very flexible and very quick to seize these new opportunities because banks have been hobbled due to their exposure to the sub-prime mortgage market and had suffered impairment to their capital.