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Alternative Market Briefing

Steinbrugge: Third party marketers can show investors alternatives to "mediocre" hedge fund performance

Thursday, February 27, 2014

Komfie Manalo, Opalesque Asia:

Donald A. Steinbrugge, a managing partner at Agecroft Partners, LLC said investors should augment the research provided by their hedge fund consultant by performing their own research and by leveraging the resources offered by some of the top third party marketing firms or 3PMs in the industry.

Steinbrugge said, "Average hedge fund performance has been mediocre at best over the past five years, which is not surprising because most of the asset flows have been concentrated in a small percentage of firms with the largest assets under management. Many of these firms have morphed into asset gatherers from alpha generators by managing significantly more assets than their strategies can optimally handle. It is no wonder that a study done by Pertrac showed that over a 16 year period, small hedge funds out performed large hedge funds in 13 out of 16 years with an annualized compound ROR for the average small fund of 12.50% compared to that of large funds of 9.16%. In 2013 the Barclay Hedge Fund index, which equally weights all managers, was up 11.11%, however the Bloomberg Hedge Fund index, which gives larger weightings to the biggest managers, was up only 7.4%."

He cited the trend amongst investors, especially amongst pension funds, to put their money into largest fund managers. Steinbrugge said both public and corporate pensions are increasingly shifting their hedge fund ......................

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