How to Build Moats in a Hedge Fund Business?

An application of 7 Powers framework on the hedge fund industry

This idea occurred to me during one of my “wisdom walks”: Why not apply the 7 Power framework to the hedge fund industry?

In this article, I will discuss how a hedge fund can successfully build moats in this ultra-competitive and fragile sector and what paths a start-up hedge fund must take to gain power.

As a reminder, the 7 Powers are scale economics, network economics, counter positioning, switch costs, brand, cornered resources, and process power.

We can skip network economics because the network effect doesn’t apply to hedge funds, unless I am missing something.