With the dramatic growth of the hedge fund industry over the past decade, one might be excused for believing the alpha genie was out of the bottle.  After all, if current trends continue, there will be a hedge fund on every corner, right?   

However, there is little doubt that the hedge fund industry is also becoming more concentrated than ever (see related posting).  To a great extent, this trend is self-reinforcing.  The more assets managed by the large funds, the more comfort institutions feel when investing in them.   

But a recent report by Watson Wyatt seems to suggest that hedge funds of fund concentration pails in comparison to concentration in private equity funds of funds.

Readers with an interest in the geopolitics of developing nations will be familiar with the Gini Coefficient.   First used in 1912, it is generally used as a measure of income equality.  A Gini Coefficient of 0.0 denotes perfect income distribution while a Gini Coefficient close to 1.0 represents very high income inequality.  Graphically, the Gini Coefficient can be described as the yellow segment divided by the entire white triangle on the chart to the right. 

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