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New Managers July 2012

Perspectives: Recent views and findings of interest to new hedge fund managers.


Most asset inflows went to $5bn+ hedge fund firms in 2Q Investors continued to allocate new capital to the hedge fund industry in 2Q12, exhibiting a clear and continued preference for strategies with characteristically low exposure to global equity markets, according to the latest HFR Global Hedge Fund Industry Report. Investors allocated $4.1bn in net new capital to hedge funds that quarter, bringing net inflows in 1H12 to over $20bn. Despite the inflow, total hedge fund capital declined by -1.3% from $2.13tln to $2.10tln due to poor performance ( Dow Jones Credit Suisse says the industry saw estimated outflows of approximately $2.53bn in June, bringing AuM for the industry to approximately $1.73tln).

Consistent with the trend from prior quarters, 2Q12 inflows remained concentrated in the industry's largest firms, with over $11bn allocated to firms with greater than $5bn in AUM, while firms with less than $5bn experienced a net redemption of approximately $6.9bn.

No more old-style hedge funds The era of multi-billion dollar hedge funds with high fees, high portfolio, high turnover and short-term views, is over, claimed MarketWatch on July 18th, confirming what we already deduced. There are four structural reasons why the industry as we know it is dead, the article says: No. 1: The incentive structure; No. 2: The overhead; No. 3: The business model; and No. 4: No opportunity for unproven managers to get funded, as indeed big assets prefer established hedge funds. The article concludes on a hopeful tone for emerging managers, "But that's not where t......................

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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.
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