“We are today witnessing the painful and necessary emergence of a new era for hedge funds,” said Jayesh Punater, CEO of Gravitas Technology. “Today’s Hedge Fund 3.0 era is born of tougher investment markets, more demanding clients, and smarter hedge fund management. This is the beginning of an exciting new growth period and hedge funds have never been more vital than they are today.”

A 20-year veteran of the financial services and financial technology sectors, Punater sees funds providing more transparency and seeking greater balance between the investing, investor and business functions.

“Hedge funds are adapting to the radically changed set of conditions required to run a successful fund business in this new environment,” Punater said.

Hedge Fund 3.0
Punater outlined the three development stages of the hedge fund industry. Hedge Fund 1.0 began with the formation of the first hedge fund in 1949 and continued until the dramatic collapse of Long Term Capital Management in 1998. Hedge Fund 2.0 encompassed 10 years of phenomenal growth for hedge funds between 1999 and 2008, when total assets under management peaked at $2.697 trillion in June 2008, according to Hedge Fund Intelligence. Hedge Fund 3.0 is beginning now, Punater said, as signs emerge that the turmoil that rocked the industry is easing and that new strength is emerging.

As early indicators of this, Punater noted that hedge funds had one of their best months ever in May, with solid performance and positive asset inflows for the first time in nearly a year. In addition, Punater’s Gravitas Technology, a 13-year-old global company that employs 90+ people providing technology, custom software development and business consulting to new and existing firms, has seen a very active hedge fund launch landscape in the half of 2009, with the first quarter the most active in five years.

Six new characteristics of growth
Punater said renewed industry growth in the Hedge Fund 3.0 era will be built, in part, on six defining traits:

· scalable/variable costs
· reducing real estate overhead
· smarter, rather than bigger funds
· focusing on business as well as investment success
· outsourcing non-investment functions
· independence