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Will investors turn to smaller hedge funds as largest firms tend to under perform?

Monday, March 17, 2014

Komfie Manalo, Opalesque Asia:

A number of large hedge funds see the value of supporting and seeding small fund managers who want to start on their own, said Darren Stainrod, a Principal at HighWater Limited. He added that while some smaller funds are consumed by bigger hedge funds, there are many examples of the larger funds spawning offspring as traders break away to start their own funds. Those traders are able to launch on their own with the support of the larger hedge funds, who see the value of supporting them and seeding them, rather than losing them altogether.

Speaking at the latest Opalesque 2014 Cayman Roundtable, Stainrod also pointed to the fact that very large hedge funds are minority in the industry. "There are probably only about 10 hedge funds out there that are $25bn+, and maybe only 100 that are over $10bn, while about 80% of all hedge funds registered with CIMA are under $200m. The giants are still the exception to the rule. Many surveys point to these smaller managers being able to generate better returns as they are often more focused, hungry and nimble in the early years,"

Kobi Dorenbush, CEO of financial services provider Caledonian Global Financial Services which is based in the Cayman Islands, agreed with the observation that smaller and more nimble hedge funds do tend to outperform their much bigger counterparts.

He said, "It......................

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