Thu, Aug 28, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers February 2013

Guest Article - New study shows small equity long/short managers outperform their larger peers over five and ten year periods

Andrew D. Beer

This article was authored by Andrew D. Beer, Chief Executive Officer of Beachhead Capital Management LLC, a New York-based advisory firm focused on hedge fund manager selection, portfolio construction, and risk management.

One of the most vexing issues in the hedge fund industry is the relationship between growth in assets under management (AUMs) and future returns. An abundance of anecdotal evidence suggests that smaller managers with great performance attract capital quickly, which dilutes future returns.Further, the recent concentration of capital among large hedge funds has raised questions as to whether this has contributed to the decline in industry-wide alpha.

In a recent report, Beachhead Capital Management analyzed approximately 2,800 equity long/short funds in order to get to the heart of this issue.In contrast to some prior studies and papers, Beachhead focused narrowly on the equity long/short space since these managers are likely to face similar capacity constraints (as opposed to, for instance, macro investors or CTAs). Beachhead divided the universe into firms that managed $50 million to $500 million in equity long/short AUMs ("Small") and those that managed more ("Big"). The $50 million lower bound was selected to make the sample more representative of an actual emerging manager investment program.

The Beachhead study reached several interesting conclusions about smaller hedge funds that will resonate with many hedge fund investors:

  • Small firms o......................

    To view our full article please login

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

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. Study shows what resonates with investors: 'Unwavering', 'passionate' beats 'committed', 'dedicated' and more surprises[more]

    Komfie Manalo, Opalesque Asia: A new study by Pershing Square, a unit of BNY Mellon company, showed that an effective value proposition strengthens audience connections and fosters growth, yet many advisors have had little objective guidance in formulating such statements until now. In the

  2. Hedge fund assets decline in July - eVestment[more]

    Bailey McCann, Opalesque New York: Total assets in hedge funds declined in July and dropped 0.49%, marking the industry's second monthly asset decline in 2014, according to the latest asset flows data from eVestment. Despite the asset decline, total industry AUM remained above the $3 trillion

  3. AIMA makes 'the case for hedge funds'[more]

    Bailey McCann, Opalesque New York: The Alternative Investment Management Association (AIMA), the global hedge fund industry body,

  4. Managed futures' global diversification is important in next phase of economic recovery[more]

    Komfie Manalo, Opalesque Asia: The global diversification provided by managed futures may prove to be extremely valuable as the markets enter the next phase of the economic recovery, said Campbell & Company, a pioneer in absolute return invest

  5. Ex-UBS prop trader's hedge fund Manikay Partners eyes UK launch[more]

    From eFinancialnews.com: Manikay Partners, a $1.7 billion US multi-strategy hedge fund set up in 2008 by a proprietary trader from UBS with backing from Goldman Sachs, is planning to open in the UK. New York-based Manikay's move into Europe comes after Financial News revealed on Monday that Aurelius