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Alternative Market Briefing

50 South Capital & Preqin highlight emerging manager outperformance in a new report

Friday, November 29, 2019

Bailey McCann, Opalesque New York for New Managers:

New data from Preqin and 50 South Capital, the investment arm of Northern Trust, shows that emerging managers are outperforming established managers by almost 4% annually. The outperformance holds across strategies, indicating that investors are getting a premium for getting in early. Opalesque New Managers spoke with Director of Research for 50 South Capital's Hedge Fund Investment Team about the results of the study and about how allocators are taking a second look at early-stage funds.

"As a team, we considerably invest in emerging managers and we think there are a lot of reasons why you should. The study shows definitively that new managers consistently outperform more established funds," Frede said.

According to the report, emerging managers outperform established managers on a one, three and five-year basis with only slightly higher volatility.

Notably, the findings show that emerging credit managers also outperform established funds refuting a long-held belief among many investors that all the performance in credit is driven by blue-chip firms.

According to Frede, the latest generation of new managers tend to be higher quality than those previous upstarts. "The barriers to entry are much hi......................

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