2004: Hedge Fund Craze Unlikely to Ebb

The commission put hedge funds in the spotlight with extensive hearings in May, before mutual fund market-timing and late-trading scandals claimed much of the agency's time and resources. Concerned that investors weren't being advised of the risks of investing hedge funds, its staff produced a lengthy report this September, recommending fund managers register as investment advisers.

The proposals are short of the clampdown urged by hedge fund critics, but politics may take over and preclude major changes. The report also called for clear descriptions of risk hedge fund marketing materials, recommended a standard valuation format and urged more disclosure of managers' fees.

Reported disagreements between SEC Chairman William Donaldson and fellow Republican-appointed commissioners Paul Atkins and Cynthia Glassman may mean many staff proposals are pushed aside as the commissioners seek unity on other issues, including mutual fund governance.

Schulman, at Tremont, calls manager registration "a minor inconvenience" and predicts investor demand from the top and bottom of the market will fuel hedge fund growth. The stock market may be back, but investors are poorer and wiser, and looking at this rally more skeptically.

"Look at the anemic trading volumes. This is not a case of, 'OK, everybody back on the bandwagon.' People have short memories, but not that short."

	1.	2004: Software's Turn to Shine
	2.	Hedge Fund Craze Unlikely to Ebb
	3.	SEC: Second Fiddle, Out of Tune
	4.	Airlines Taxi Toward Profitability
	5.	Markets Can Still Cash In on Government Help
	6.	Economy Sobers Up, but Hangover Lingers
	7.	Sound, Fury but No Inflation
	8.	Market Rally Still Has Legs
	9.	Asset Allocation Done Right
	10.	The Five Biggest Scandals of 2003

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