Beverly Chandler, Opalesque London for New Managers:
The latest Hedge Fund Spotlight from Preqin examines emerging hedge fund managers and finds that hedge funds launched by new managers offer the
potential for greater returns. The firm says that first-time funds on average post better returns than funds launched by established
firms, but institutional investor
interest in emerging managers continues to decline.
Preqin’s figures reveal that the average emerging manager long/short fund launched since 2007 delivered annualized net returns of
8.80% in its first three years of trading, compared with
an annual rate of 5.38% from newly-launched funds
managed by established firms.
However, first-time funds exhibit more volatility
than funds managed by experienced firms. The average
annualized volatility of returns during the three years following inception were approximately 14.7% for
established manager long/short funds compared with 17.3% for emerging manager long/short funds.
Other key facts to emerge from the study include: