Firms may be more inclined to open their doors to outside money after a year or two of strong performance, particularly if they have outperformed their peers, Panayiotis Lambropoulos, hedge funds portfolio manager at the Employees Retirement System of Texas, said by email.
“If managers raise capital simply because they can, they may be introducing business instability down the road,” he said. “The same hot capital that came in yesterday will most likely be the first capital to flee tomorrow should performance turn south.”
This article was provided by Bloomberg News.