They are the managers who launched into the worst financial crisis since The Great Depression. The swelling ranks they joined would soon be devastated from the investor redemptions and performance losses that took the industry from a peak of $2.1tln assets down to $1.5tln as of this year.
Those that survived the most devastating time in hedge fund industry history enter the expected period of asset growth in a position of strength. Smaller, newer firms have been shown to deliver strong performance and although that has been in their favor, the asset-raising environment has not. Even though $100m has officially been declared the new $1bn for hedge fund launches, for many young funds $100m is not a realistic launch but remains a long-term asset-raising goal.
The good news is launching into such turbulence has provided managers with more than just gray hair. They have been given the chance to build up track records that illustrate mastery of their strategy and excellent risk management. Although much of the current asset growth is being funneled into larger funds, these managers maintain that consistent performance and a long-term outlook for building their businesses will eventually translate into sharing the assets expected to return (in excess of previous highs) to the industry.
Suranya Capital Partners
For Anu Murgai, Managing Principal and Portfolio Manager of Connecticut-based Suranya......................