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Investment bankingSeptember 4 2005

Complement or competition?

Alan McNee considers the potential convergence of hedge funds with private equity as they attempt to maintain their high returns.The distinction between hedge funds and private equity firms gets less clear-cut as the months go by. As they participate in more and more leveraged finance deals, traditionally the preserve of the financial sponsor community, some argue that there is little to tell between them.
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So are hedge funds morphing into private equity firms? Or is there, as other bankers argue, more talk about it than hard evidence?

There is no doubt that hedge funds have diversified from their traditional focus on bringing leverage to bear on liquid, tradeable financial instruments.

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