Philippe Bonnefoy from Swiss hedge fund Cedar Partners said too much supply may well be a reason for the poor MF Global raising.
He added, "With the subprime issue in the States and slight risk aversion in the markets in regards to hedge funds -- which then creeps into the area of brokerages -- it is slightly a nervous time to be entering [the] market."
"Also, the Blackstone [private equity IPO] reception was barely muted and is trading below its IPO price, which is not a good sign," he said. "We may well be at the top of the cycle for brokers, banks and revenue flows." The pricing of MF Global, he added, is probably indicative of "a topping of the market."
"There could still be a bit of erosion, but the real story is concerns about subprime having a bigger impact on the market and potentially on hedge funds. Investors are cautious about anything to do with banks, brokers and hedge funds," he said.
Absolute Capital Management Holdings Chairman Sean Ewing is more positive.
He told Thomson Investment Management News, "Fund raising across industry has been very strong; inflows into hedge funds are strong. Year-on-year, in the main groups, inflows have been about 30 percent."
But even he concedes investors have been spooked: Ewing said people are looking more closely at "asset allocation and proven track records, and probably the subprime thing has blown a little bit of concern through some people."
In March of this year, ACM said it was looking at opportunities to list a permanent capital vehicle on the London Stock Exchange to open up its strategies to retail investors and smaller institutions. It has yet to announce any firm plans.