Fri, Dec 9, 2016
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. Institutions - Texas County & District culls 5 hedge funds, reallocates to existing managers, Kentucky board gives final approval to halve hedge fund portfolio, $38bn Finnish fund moves assets to U.S. as Europe flounders, South Korea’s National Pension Fund holds 5% stake in 62 listed companies[more]

    Texas County & District culls 5 hedge funds, reallocates to existing managers Texas County & District Retirement System, Austin, continues to reduce the number of hedge funds, but not the size of its $6.2 billion hedge fund portfolio. It will redeem a total of $760 million from five hedg

  2. Opalesque Roundtable: Australian family offices search for good risk adjusted returns, happy to pay for skill[more]

    Komfie Manalo, Opalesque Asia: Australian family offices want foremost good risk adjusted returns, and they are happy to pay for the skill, and in some cases, the limited capacity of an active manager. Jonas Daly, Head of Distribution at B

  3. StepStone announces close of Swiss Capital acquisition[more]

    StepStone Group LP announced it has successfully closed the acquisition of Swiss Capital Alternative Investments AG, one of the leading private debt and hedge fund solutions providers in Europe. The transaction was originally announced in May 2016, and has been in the process of receiving regulatory

  4. Investing - Stephen Cohen investing $275m in free clinics treating veterans' mental health issues, California Resources loses favor with hedge funds[more]

    Stephen Cohen investing $275m in free clinics treating veterans' mental health issues From Healthcarefinancenews.com: …Now, a new chain of free mental health clinics for vets has opened in five cities across the United States to fill the gap. The much-needed new treatment is underwritten

  5. Hedge funds flat in last week of November 'in sympathy with markets’[more]

    Komfie Manalo, Opalesque Asia: Hedge funds were close to flat in the last week of November in sympathy with markets, which took a pause ahead of the OPEC meeting and Italian referendum. The Lyxor Hedge Fund Index was -0.1% as of end November 29 (-1.7% YTD), according to the latest