Investment Niche Necessity (Mother of Invention?)
The employing sectors in the securities industries are diverse and the NAICS industry coding system somewhat reflects this. Hedge funds are not only venture capital participants but also act like private equity and have even gone whole-heartedly into company operation and management. Some hedge funds may even become public companies to access more capital. Is a fragmentation happening in the securities industries like what happened last decade to the insurance industry's old-line companies after Hurricane Andrew? Frankly, some of Connecticut's investment employment growth may be coming from the splintering of the insurance industry and the crossover specialization and expertise that is so successful for risk and capital management. Some capability is also coming out of the Wall Street talent pool, as technology has led to some dispersion, decentralization, and need to break away from the "herd on the street" where size can be the enemy of performance. Newly minted MBAs are flocking to the industry as well. This fragmentation may be just really following the money as insurers, pension funds, and investment banks are placing ample institutional money with the hedge funds, that are providing the risk-adjusted returns.
"(Alan) Greenspan called exotic derivatives, and their hedge fund architects, "pollinating bees" and "extremely important" to a complex global economy, since their high rates of return help stabilize the entire economic system and offset meager savings rate"(1) This could be even truer as individual shareholders need help in combating corporate malfeasance.
Activist hedge funds and private equity are taking on inefficient and greedy management and in some cases bringing home to Connecticut some of the corporate influence that has been lost from Connecticut in recent years through out-of-state mergers and relocations.
Stock markets are becoming commoditized with indexers while specialized Connecticut players are developing their niche. And these titans and their investment pools are also funding movies and influencing many other industries. Additionally, market and commodity research firms are also positioning themselves around the hedge fund complex in Fairfield County. There are a lot of opportunities for business spin-offs from these high paying segments.