Emerging Manager Performances
Emerging Fund Managers Outperform Established Ones
Recent hedge fund research came up with a surprising conclusion that flies in the face of conventional thinking of investors. According to Hedge Fund Research data, emerging managers actually outperformed more seasoned, established hedge fund managers. Managers with 2 years or less of experience had annualized net returns of 9.3%, opposed to 4.5% for established managers.
Fledgling managers may have an edge, fund analysts say, because they
aren't weighed down with legacy positions and are free to invest as they
see fit.
"You can have more-concentrated
positions," says Rajesh K. Aggarwal, an associate professor at the
Carlson School of Management at the University of Minnesota who has
studied emerging fund managers.
What's more, since hedge-fund managers
collect performance-based fees, "the incentives to perform well in a
new fund are tremendous," he says.
The term "emerging" is used loosely
among fund managers. It can refer to managers at firms with less than
$500 million or so in assets and track records of three years or less,
though some investors include women- and minority-owned firms.
Historically, such managers were
available mainly to pension funds and other institutional investors. But
high-net-worth investors increasingly have access to such managers
through hedge funds, funds of hedge funds and other vehicles. Source
Related to: Hedge Fund Update
Tags: hedge funds, hedge fund managers, fund managers, emerging manager, emerging managers, hedge fund, emerging fund manager, hedge fund performance, emerging manager performance
