Thu, Apr 17, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Asian investors put faith in emerging hedge fund managers while Western investors shy away says Preqin

Friday, December 09, 2011
Opalesque Industry Update - Proportion of Asia-based investors willing to commit to emerging manager hedge funds has increased by 11 percentage points in the past year.

While European and North American investors are shying away from investing in emerging manager hedge funds, Asian investors are increasingly keen to commit to such funds, the latest Preqin research shows. Fifty-eight percent of investors in the region are prepared to invest in emerging manager hedge funds, compared to 39% of European investors and 48% of those in North America. Emerging manager hedge funds are generally considered more risky due to the manager’s lack of track record; as investors remain cautious about making new hedge fund investments it is perhaps understandable that they would be less keen to commit to emerging funds. However, Asian investors were generally less affected by the downturn than those based elsewhere, which could explain their continued, and indeed increased, confidence in the asset class and their enthusiasm for emerging manager funds.

The willingness to invest in emerging manager funds varies with institution type; this is shown in the graph here.

Other Findings:
 48% of investors will commit capital to first-time funds, a decline from 54% in 2010.
 Spin-off teams have become less attractive to investors; the proportion willing to invest has fallen from 61% in 2009 to 43% in 2011.
 Just over one-fifth, 21%, of investors are willing to provide seed capital.
 83% of investors believe that emerging manager funds have the potential to offer better returns than more established funds.
 78% of investors will invest with managers that have less than $500mn in AUM.
 11% will only invest with managers with over $1bn under management, twice the proportion noted in 2010.

Comment:
“Over the past three years fundraising conditions for newer funds have become increasingly difficult as many institutions eschew emerging managers in favour of vehicles with longer track records. However, our results indicate that nearly half, 48%, of investors would still invest or consider investing in emerging managers, even in this difficult fundraising environment. In 2012, emerging manager vehicles are likely to appeal to investors disappointed by the returns from their existing hedge fund portfolios. Similarly, with fees also a key issue for institutional investors at present, emerging managers willing to negotiate fund terms with potential investors could also be successful in attracting capital.” Amy Bensted, Manager – Hedge Fund Data

Preqin is the leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. www.preqin.com

BG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Banner
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: European stock-picking fund up 19% YTD, bets on small caps’ high cash level[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Here is a European long/short equity fund that has been beating the odds since its 2008 inception by employing its own investment model, frequent company visits

  2. CTAs could face new challenges in a rising rates environment[more]

    Bailey McCann, Opalesque New York: CTAs have taken a beating performance wise lately, and asset flows reports show that investors aren't sticking around to see how the movie ends. Now, a new white paper from Roy Niederhoffer and Coen Weddepohl notes that as interest rates start to tick back u

  3. Investing – Big hedge funds bought Puerto Rico's junk bonds, Fidelity explores new trading venue amid flash trade concerns, Crisis-era Greek bonds reward early buyers with big effective returns, Cargill unit discloses stake in Freddie preferred[more]

    Big hedge funds bought Puerto Rico's junk bonds From Reuters.com: Several large hedge funds doubled down on Puerto Rico in last month's giant bond sale despite the U.S. territory's financial struggles, the Wall Street Journal reported, citing confidential documents reviewed by the newspa

  4. Opalesque TV: First Trust Advisors launches liquid alternatives platform[more]

    Bailey McCann, Opalesque New York: First Trust Advisors is launching a new liquid alternatives platform aimed at building on the companies existing alternative ETFs offering by adding hedged mutual funds. Senior Portfolio Managers Rob Guttschow and John Gambla recently sat down in an

  5. Commodities – Popular value fund manager David Iben bets on Russia, gold,[more]

    From Reuters.com: With large bets on Russia and North American gold miners, one of the best performing stock pickers in the wake of the 2008 financial crisis is back with a new fund that reflects his deep aversion to following the crowd. In the Kopernik Global All-Cap Fund, David Iben is follo