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Is this the end of the hedge fund?

The collapse of the Bernard Madoff investment fund operation has placed hedge funds back under the microscope at a time when they are suffering more than most. These are funds which often take large and potentially risky positions in various investment markets which can result in substantial swings in asset values. They have been blamed for a number of short selling situations, in particular the UK banking chapter earlier in 2008, but again short selling is a part of any market when it is carried out within the rules.

However, the demise of the Madoff investment funds and the alleged $50 billion fraud could well spell the end for the hedge fund as we know it today and see investors steer clear some time to come. Whether hedge fund managers will reappear under a different guise remains to be seen but even the best hedge funds are having trouble with their liquidity and investors are struggling to understand exactly what they have invested in.

Regulators would be happy to see the demise of the hedge fund which has been a difficult area to police and one which even at the best of times has attracted some unpleasant headlines.

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