The head of Barclays Global Investors, the world's biggest money manager, has said the distinction between hedge funds and the mainstream asset management business has become increasingly "arbitrary" as the two industries converge.

Blake Grossman, chief executive of BGI, told the Financial Times in a rare interview: "The notion that there is a traditional way of investing that is long only, and then there is hedge funds, is crazy. We're seeing real convergence. We're getting mandates to employ some degree of short-selling, some degree of derivatives . . . If you look out five years, there will be much less of a divide between what's considered a hedge fund and what's considered a traditional strategy."