Sat, May 27, 2017
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.

Â

Â

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. Soon hedge fund investors won't bet on a man, they will bet on a machine[more]

    From Forexlive.com: The Wall Street Journal is in the midst of a 17-part series that looks at the rise of quant funds. The AUM and money invested in quant funds still trails traditional asset managers but the gap is closing. What's truly amazing is volume. Quant funds make up 27% of trading vo

  2. Investing - China's HNA wants to invest in Value Partners, Risk parity investors reap rewards from rebalancing act, SoftBank's $100 billion tech fund rankles VCs as valuations soar[more]

    China's HNA wants to invest in Value Partners From Reuters.com: HNA Group has alighted on a logical, if pricey, target in Hong Kong. The deal-hungry Chinese travel conglomerate known for overpaying wants to invest in Value Partners, one of Asia's few sizeable independent asset managers,

  3. Opalesque Exclusive: Investors warm to ESG, but seek standardization[more]

    Bailey McCann, Opalesque New York: Asset managers and asset owners plan to double their investment in Environmental, Social and Governance (ESG) driven strategies over the next two years, according to a survey from BNP Paribas Securities Services. The report, "Great Expectations: ESG - what's nex

  4. Opalesque Roundtable: France's hidden strengths in AI and machine learning[more]

    Komfie Manalo, Opalesque Asia: All nations offer their strengths and weaknesses, but one that is undisputed is the quality of the French scientists, claimed Guillaume Vidal, co-founder of French technology startup Walnut Algorithms at the

  5. AI-based hedge fund brings machine learning investing to masses[more]

    Komfie Manalo, Opalesque Asia: Machine learning-based hedge fund firm Greyfeather Capital is trying to bring artificial intelligence investing to the masses with its plan to expand beyond the limited reach of the alternative investments space. "We're excited to bring AI technology to traditio