Beware the industry naysayers who proclaim hedge funds aren't worth their salt/fees/risk/terms/etc. Sweeping generalizations may make good headlines, but they are invariably proven false by the minority that refutes them through action/statements/results/ etc.

Investors who take the time and effort to look under the 'hedge fund hood' can find real value among emerging managers who traverse the less traveled paths of finance.

Let's take a look at five reasons why smaller managers deserve examination by investors seeking a different perspective and outcome in alternatives.

According to Edmunds, the industry's forefront resource on automotive information, certified preowned (CPO) cars are popular with buyers who want to minimize the risk of buying a used car. To be a CPO car, a vehicle needs to meet specific age and mileage requirements, undergoes a thorough inspection, and, if a car passes, gets an extended limited warranty and carries a higher price than a non-CPO model. Many people feel comfortable in paying that premium because of the peace of mind a CPO program gives them.

Just as with CPO vehicles, the CPO purchase process isn't flawless. There is some level of risk involved in buying any used car, but with a CPO vehicle, it is typically lower.

Emerging managers are frequently overlooked by wary investors who tend to aggregate around the old establishment of larger hedge funds and avoid the lesser-known funds.

The smaller fund managers may not even make an initial evaluation list simply by virtue of not being well-known. Yet, much like certified pre-owned cars, emerging managers have often come out of the same pool of talent that has populated the industry giants. Here are several similarities between CPOs and emerging managers

These managers have, in large measure, graduated from the same universities, worked at the same investment banks and corporations, received the same registrations and certifications, and have performed a......................

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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.