Smaller Hedge Funds
Many Smaller Hedge Funds Drawing Investor Capital
Larger multi-billion dollar hedge funds often have an easier time attracting capital from investors than their smaller peers. In January, however, one hedge fund showed that impressive performance, even from a smaller hedge fund, can boost assets under management considerably in a short period of time irrespective of fund size. Carlson Capital LP, a sub-$1 billion fund, has been able to draw in more capital than its larger competitors like the multi-billion dollar Paulson & Co.
Maraviglia, who now oversees about $610 million for Carlson Capital LP from London, raised the money because the almost 40 percent gain he posted last year made him a rarity: a hedge-fund manager who made money trading stocks. Hedge funds were down an average 5 percent in 2011 and those focused on equities fared even worse, losing 8.3 percent, Hedge Fund Research Inc. says.
Though the largest hedge funds continue to attract the bulk of the industry's incoming money given their perceived lower risk, Maraviglia has outperformed better-known rivals including Paulson & Co., which manages $23 billion, and Lansdowne Partners Ltd., with $12.5 billion, which made big bets on stocks in 2011 and had their worst years ever. The 42-year-old veteran of Steve Cohen's SAC Capital Advisors LLC says small size made him nimble as stocks gyrated and enabled his individual bets to make more difference to the fund's total returns.
"Larger hedge funds have been victims of their size and the volatile markets in general," said Andrew Lee, a New York- based adviser at JPMorgan Chase & Co.'s wealth-management unit, which helps clients find emerging managers. "Smaller funds are able to react quickly and so are better positioned." Source
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