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Alternative Market Briefing

Asset raising for hedge funds is more exponential than linear says Agecroft’s Don Steinbrugge

Wednesday, September 04, 2013

Beverly Chandler, Opalesque London:

Don Steinbrugge of Agecroft Partners has issued his thoughts on asset growth in hedge funds, saying that he believes momentum in asset growth is vital to successfully raising hedge fund assets.

Steinbrugge writes: "Many small to mid-sized hedge funds become frustrated because their firm’s assets under management are not growing and they believe the market is biased against them based on their asset size. They are constantly hearing that a majority of assets are flowing to the largest hedge funds despite evidence that shows smaller hedge funds have significantly out performed larger funds over time."

Steinbrugge believes that many live in the expectation that once they get to a certain asset size, it will be much easier to raise assets. "However" he writes, "that is not necessarily true. Agecroft Partners believes that momentum in asset growth is more important to being successful in raising hedge fund assets for small and medium sized hedge funds than the current asset size of the organization."

Steinbrugge bases his belief on the fact that most hedge fund investors put much more weight on what happens to a hedge fund after the initial meeting than on the historical track record. "For example, the performance generated by the hedge fund in the 12 months after the initial meeting is of equal importance to an investor as the previous ten year historical track reco......................

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