New Managers October 2012

Fundana Series - How do seed deals impact on the performance of new hedge fund managers?

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Nick Morrell The Fundana series of articles discusses Investments in Emerging Managers; it derives from the real world experience of the Fundana team. Fundana is the investment advisor to several Funds of Hedge Funds and directs at least half of its new investments to Emerging Managers. The investment process typically involves allocating a small amount Day 1 or Early Stage (defined as less than one year after the fund's launch) to new managers who have strong pedigrees. The objective of this series of articles is to share thoughts around our key observations. It does not aim to be "statistically significant" but to create a dialogue around those observations.

This article (from Nick Morrell - Head of Operational Due Diligence at Fundana) is a follow-up of the June article (How do seed deals impact on fund raising for new hedge fund managers?), and takes a deeper look at the use of seed deals by new hedge fund managers to pose the question:

"Does accepting a seed deal impact on performance?" In essence, this article aims to help investors to decide if they are better off looking at funds with seed deals or those without. As discussed in the previous article, the seed deal landscape has changed significantly over recent years. Seeding of emerging managers has become more institutionalized since the 2008 credit crisis, at a time when asset raising for newly launched hedge funds has become significantly more difficult. Reading the data......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.