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Younger funds are a safer bet than older funds

Tuesday, November 01, 2011
Opalesque Industry Update - In its most recent client monthly newsletter, GFIA pte ltd, the Singapore based specialist in skill-based managers in Asian and emerging markets reviewed relationship between the age of Asian hedge funds, and their performance, during the different market environments.

GFIA’s study found that the outperformance of young funds seemed to be significant only after 2008 (financial crisis period), when most existing funds experienced large losses. However in difficult markets, younger funds generally have trumped older funds.

Summary findings include:
· Funds with more than five years’ track record seemed consistently to generate worse risk adjusted returns during the last down market (Nov 2007 - Feb 2009)
· Young funds always almost always resulted in lower drawdowns

Peter Douglas CAIA, principal of GFIA, commented: “While many investors perceive new funds to be more risky than established funds, in fact younger funds may be better at mitigating losses in tough markets.”...Corporate website: Source


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