Sat, Dec 10, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers March 2012

Focus
A look at funds of hedge funds that invest in emerging managers

Funds of funds and emerging managers: a mutually beneficial partnership

One place emerging managers can be sure of being welcomed are funds of funds, at least those that tend to invest in them. Specialist funds of funds who actively support emerging managers offer a safe haven. They share their entrepreneurial stance: they see potential in start-ups. And at the same time, they are well equipped - better than a lot of institutions for example - to do thorough checks and to assess the risks.

To determine key trends in early stage investing since 2008, Citi Prime Finance, a prime brokerage and capital introduction firm and a subsidiary of the bank Citi, interviewed 90 firms: investors who are active in that space and recently launched managers. This resulted in a useful report for emerging managers, called Day One and Early Stage Investor Allocations to Hedge Funds.

The majority of Day 1/Early Stage (D1/ES) investors surveyed by Citi are funds of hedge funds (FoF) - around 70%. One of the reasons for this is that FoF are the biggest investors in start-ups. Their capital is dedicated to investing in hedge funds and must be fully invested at all times, unlike other investors, institutional or private, who tend to invest across other asset classes too. FoF also have bigger due diligence (DD ) teams, are better positioned to know of managers launching new funds, and are not constrained by "rigid concentration limits that restrict the percentage of a new manager's assets under management (AuM) they can represent." Furthermore, institutional investors tend to go to FoF if they want exposure to emerging managers instead of making a direct investment.

Opalesqu......................

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