Sat, Nov 1, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers June 2013

Focus - The plight of emerging managers, and the general partnership solution

With the increased compliance and regulatory oversight, small and emerging fund managers have to deal with higher costs while at the same time struggle to attract assets; they are being pinched by those two different critical business components. Mrs. Jones of Rothstein Kass describes the current trends and challenges that small and emerging managers are currently encountering, and Mr. Allan of LAIC proposes a solution.

It never was easy to launch a new business, including a new hedge fund. But why has it become so much more challenging of late? According to Meredith Jones , director of research at Rothstein Kass, a large U.S. accounting and auditing firm, this is due to a flight to quality that took place after the 2008 crisis and the Madoff scandal. This flight to quality meant investors going to the larger fund managers.

Meredith Jones Now, around 90% of the industry's capital is in the billion dollar club. The remaining 9,600 funds, she tells Opalesque, are struggling to get assets and keep their business alive. If this goes on, she adds, "it can have the unfortunate effect of homogenizing the industry, because a lot of larger firms tend to look fairly similar, they tend to become more multi-strategy firms at that point in order to put the money to work. And a lot of the alpha is actually in these smaller funds."

Indeed, empirical data clearly shows that young funds (less than four years old) and smaller funds (with less than $100m) outperform their more tenured and larger competitors.

 

 

Jones explains why smaller funds produce the alpha:

......................

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. Macks aim to raise $750m for real estate debt fund[more]

    From Therealdeal.com: Father-son duo William and Richard Mack and former Blackstone Group managing director Peter Sotoloff are starting a new real estate debt fund. Together, the trio hopes to raise more than $750 million for the private equity fund, according to the Wall Street Journal. The fund wi

  2. Manager Profile - Seth Klarman: Lessons for retail and institutional investors[more]

    From Valuewalk.com: Seth Klarman is virtually unknown outside value circles, despite his impressive record and value of assets under management. On average Baupost has returned 19% p.a. despite holding a large portion of its assets in cash. During the financial crisis, Seth Klarman’s funds lost some

  3. North America - FATCA leads 75% of U.S. expats to consider dropping citizenship[more]

    From International-adviser.com: Nearly three quarters of American expats are considering the renouncement of their citizenship following July’s introduction of the “absurd” Foreign Account Tax Compliance Act (FATCA). The findings, which were revealed in a survey by deVere, come alongside the news th

  4. New app allows asset managers easy interaction with portfolios, securities, holdings, transaction details[more]

    Komfie Manalo, Opalesque Asia: Global financial services software company SS&C Technologies Holdings has launched Explorer, a powerful data visualization and analysis tool that turns critical investment data into meaningful information. Explore

  5. Opalesque Exclusive: Mariner’s new healthcare mandate applies strategic approach across pharmaceutical and biotech sectors[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A team of two was hired in February this year t