Industry Shakeout Clips Hedge Funds

A massive shakeout is transforming the world of hedge funds, the Wall Street Journal reports. Tougher market conditions mean smaller funds are merging or closing their doors, and new ones are facing difficulty getting started. The business, which mushroomed from a few hundred firms to 8,000 over a decade, is increasingly dominated by "goliath" funds managing over $5 billion in assets.

There are still fortunes to be made in the hedge fund world but as the big funds keep getting bigger, the industry is beginning to shed its swashbuckling, risk-taking image. Large funds are beginning to act more like conventional institutional investors. The size of the superfunds mean they can now play a bigger role in shaping the financial and business landscape. (More hedge fund stories.)