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Alternative Market Briefing

Investors are considering greater investment in emerging hedge fund managers

Friday, May 20, 2016

Komfie Manalo, Opalesque Asia:

Investors are considering greater investment in emerging hedge fund managers in reaction to the recent underperformance of many blue-chip hedge funds versus historical returns, claimed a new paper by Worth Venture Partners titled Accessing Emerging Hedge Fund Returns – Seeking Return Over Size as part of its series of commentaries, Worthy Insights. Worth Venture is an emerging manager hedge fund platform headquartered in Manhattan.

The paper said that the increase in emerging manager allocations, notably from institutional investors, originates from a desire to source sustainable alpha. This paper shines a light on current options for investors wishing to execute in this fertile part of the hedge fund universe.

Abby Flamholz, partner and co-founder of Worth, commented, "Academic research, supported by a number of studies, reinforces the expected premium of emerging hedge fund manager investing." The paper documents emerging manager outperformance of 1.7-2.2% per year, over various time horizons and particularly during periods of financial stress.

Flamholz continued, "In order to efficiently capture the return premium, closer monitoring is often warranted. External oversight when investing in smaller managers can add an elevated level of risk management. Recent innovation in the methods of monitoring has resulted in cost efficient solutions, providing c......................

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