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Komfie Manalo, Opalesque Asia:

Hedge funds with strong brands attract the most assets, claimed Donald A. Steinbrugge, managing partner at Agecroft Partners, LLC, citing data from Hedge Fund Research. He said that data from HFR showed a large amount of hedge fund assets flowed into a small minority funds with the strongest brands.

An estimated 69% of hedge fund assets are controlled by firms with over $5bn in assets under management and 91% are controlled by firms with over $1bn in assets. This is a significant increase from the 2009 percentages of 61% and 86% respectively, he said.

Steinbrugge explained, "A brand is an investor's perception of the overall quality of a hedge fund based on multiple evaluation factors that evolve over time. A high-quality brand takes a long time to develop, but once achieved, it significantly enhances a firm's ability to raise capital and retain assets during a drawdown in performance. Over time, we believe the trend concentrating a higher percentage of assets in the largest managers will reverse. We expect this to happen due to increased sophistication of institutional investors, poor recent performance of many of the largest, well known hedge funds, the pressure institutional investors are receiving to enhance returns, and the belief that smaller, more nimble managers have an advantage in a performance environment increasingly dependent on security selection. This is especially true for small managers operating in less efficient ma......................

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