(by Ameli Berksman)

Hedge funds grow faster making traditional bond investors transform in their behaviour as bond market prices change.

The total amount of about 7,000 hedge funds can be the determinant of market changes, specialists say. “Hedge funds have certainly speeded up investors’ time horizons,” says Paul Mingay, head of credit strategy at Morley Fund Management. Louise Purtle from consultancy CreditSights is also stressing the necessity to study “the impact of hedge funds and their use of derivatives”.

The UK retailer Marks and Spencer received a bid approach from Philip Green in May, which led to Marks and Spencer’s most liquid bonds have fallen from 95p to 81p in the pound. The price in the cash bond was motivated by the spreads on its credit default swap. This was a good example as for the situation.

Still, fund managers mostly do not consider the volatility of hedge funds to be a negative factor.