A few items on the ever-changing environment for hedge funds:

Barry Ritholtz at the Big Picture points to a study on the effect of the growing number of hedge funds. He posits a seldom-asked question: “How many of the 8,000 so-called hedge funds are truly hedge funds?â€? Ritholtz believes that the vast majority of the funds are small, variations using day-trading strategies. In short he believes that very few of the 8,000 are serious hedge funds with over $100 million in assets with a well-defined strategy. Take a look, Ritzholtz asks an interesting question and provides a thought provoking answer.

Svea Herbst-Bayliss for Reuters writes that a number of hedge fund managers and executives are returning to traditional money management firms. Expectations are that with many hedge fund firms having mediocre years there will be little in the way of incentive pay for managers, therefore driving them back to their more staid, and stable brethren. In addition, many managers are glad to rid themselves of the many annoyances of actually running a small business.

We linked earlier to a piece by David Skeel for Legal Affairs that posited that “hedge fund misbehavior looks ominously like the edge of the next wave of financial scandals.â€? Now he and Dale Oesterle engage in an online debate: Should Hedge Funds Be Regulated? An interesting discussion for anyone interested in present and future hedge fund regulation.