According to Morgan Stanley's prime-brokerage unit, the 100 largest hedge funds now control about 70% of the money in the hedge fund world, up from less than 50% at the end of 2003. The shift is making it harder for smaller funds to attract investors and is preventing some Wall Street pros from starting their own funds. Firms like D.E. Shaw, Fortress Investment Group and Citadel Investment Group now manage between $13 billion and $31 billion each.

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