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Alternative Market Briefing

Study finds that smaller hedge funds outperform their larger peers

Tuesday, September 27, 2011

amb
Lisa Corvese
From Precy Dumlao, Opalesque Asia:

Small hedge funds outperform mid-size and large funds, and young funds outperform older ones, according to PerTrac’s latest report "Impact of Fund Size and Age on Hedge Fund Performance," which found that funds with less than $100m in assets under management (AUM) returned +13.04% in 2010, compared to +11.14% posted by mid-size funds ($100m to $500m AUM) and 10.99% gains achieved by large funds (over $500mAUM).

PerTrac, a provider of hedge fund analytics, added that their study also showed that performance of small and mid-size funds through the first six months of 2011 was better than their performance over the same period in 2010.

"The 2010 and first half of 2011 findings continue to suggest that investors seeking to maximize their returns should examine funds with less than $100 million in AUM or funds with less than two years of existence provided they fit their liquidity and allocation profile," commented Lisa Corvese, Managing Director of Global Business Strategy, at PerTrac.

PerTrac defines young funds as those founded less than two years old. These funds reported average gains of +13.25% in 2010, compared to gains of +12.65% and +11.77%, respectively, for mid-age funds or those that has been existing two to four years and "tenured" funds older than four years.

Surprisingly, these young funds achieved better returns with less risk than ......................

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