New Managers February 2012

Peter Urbani' Statistics
Peter Urbani's quantitative analysis of emerging managers' performance

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Emerging Managers outperform strongly since 2007 - keep pace with Equities post 2008

Peter Urbani An analysis of the funds contained within the Opalesque Emerging Managers Index shows the following:

The Opalesque Emanagers Total Index has delivered compound average annual returns of just under 17% since Jan 2007* and just over 16% since Jan 2009 post the 2008 crisis period. This postcrisis period return is in line with the just under+16% from Equities and very substantially higher than that of all of the comparative Hedge Fund benchmarks.

In the wake of the 2008 crisis period we saw a plethora of new alternative investment structures launched to meet the increased demands for liquidity and transparency. These included the increasing popularity of various Managed Account platforms, Newcits (UCITS III compliant) funds and even a number of US Act40 Alternative ETF's.

Three years down the track we can say that at this stage the aggregate returns of these newer vehicles have been disappointing with Managed Accounts averaging +2.76%, Newcits +2.37% and Fund of Funds +3.03%. It is worth noting that Bonds returned +5.66% p.a. over this period. The broader stand alone Hedge Fund universe returned a respectable +8.8%.

If one looks at the longer 4 year history from 2007 then you can see why Funds of Funds in particular are continuing to struggle as fully 50% of them remain below their high water marks and are not able to earn performance fees. Equities have also yet to recoup all of their 2007 - 2008 losses.

*based on a statistical backfill for period prior to Jan 20......................

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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.