New Managers April 2012

Fundana Series
A new series: analytical observations on real investments in emerging managers

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The median and average sizes of the new launches have been cut in half post 2008

The Fundana series of articles discusses Investments in Emerging Managers; it derives from the real world experience of the Fundana team. Fundana is the investment advisor to several Funds of Hedge Funds and directs approximately half of its new investments to Emerging Managers. The investment process typically involves allocating a small amount Day 1 or Early Stage (defined as less than 1Y after the fund's launch) to new managers who have strong pedigrees.

The objective of this series of articles is to share thoughts around our key observations. It does not aim to be "statistically significant" but to create a dialogue around our observations.

The Emerging Managers space is currently in vogue. Following the 2008 credit crisis, allocators focused first on the opportunity to invest with previously hard-closed Blue Chip hedge fund managers. Now that most of those funds are hard-closed again, investors are taking another look at Emerging Managers.

This article looks at the level of assets raised by the managers at the launch of their funds before the 2008 crisis and after the crisis.

It focuses on the small and mid-sized launches (typical Day 1 assets under management ("AUM") of between $20m and $500m) as Fundana does not invest in the very large new launches (>$1bn at launch). The dataset has been compiled from all the new investments made since January 2006, encompassing 66 new investments to date in the Long/Short Equity, Global Macro and Event Driven strategies.

What impact did the crisis have on Day 1 investments?

For the purpose of this article, we consid......................

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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.