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From Kirsten Bischoff, Opalesque New York:
Even though they seem to continue to favor established hedge funds, large firms are taking a second look at the benefits of investing into emerging managers. In Neuberger Berman’s, 2011 Strategy Outlook, the firm studied 288 emerging managers and found their performance since 2002 showed emerging managers annualized +9.49% versus the +7.61% achieved by emerged managers during the same time. “Based on this analysis, the emerging manager’s trend of outperformance seems clear,” says the report, published by the firm’s fund of hedge funds team.
“On both an absolute and risk-adjusted basis, emerging managers perform better than their emerged counterparts, notably with less correlation, less beta and more alpha to all major market indices. ” Perhaps most importantly, emerging managers in long/short equity strategies outperformed their established parts significantly during times of market stress during 2007-2009 and in the earlier part of the decade after the collapse of the tech boom.
“While resources are of course necessary, the proverbial ‘manager and a Bloomberg,” could effectively identify “good” stocks and “bad” stocks with great success,” says the report.
The firm does address some of the risks of investing in emerging managers such as relatively shallow infrastructures, lack of meaningful portfolio experience, and lack of capital stability (large firms s...................... To view our full article Click here
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