Hedge Funds Manhattan
In Pursuit of Clients, Hedge Funds Take ManhattanIt might not seem too far to travel from New York City to Greenwich for a meeting, especially when you are considering investing upwards of $1 million in a Connecticut hedge fund. Yet, hedge funds are increasingly finding that short train ride or hour-long drive to be too far for prospective clients. The solution for many hedge funds, especially emerging managers trying to eliminate any obstacles to growing assets under management, is to move to where the clients are, and for the most part, they are in New York.
It's not to say that there isn't still a very strong contingent of hedge funds in Connecticut and cities outside of Manhattan, but in such a tough fundraising environment some hedge funds are looking for any edge they can get and recognizing that shortening the trip for a potential investor can really make the difference. New York has always been seen as the ultimate hedge fund hub, but more and more managers are setting up offices in the city to be close to institutional investors and LPs visiting from out of state or out of country that probably wouldn't make it to Connecticut or other less traveled states.
Hedge-fund managers have long viewed New York as a prime location for business because of its appeal to employees and its status as one of the world's financial centers. It doesn't hurt that many managers call the island home.
But in a difficult fundraising environment that favors funds that already oversee billions of dollars, startup managers have had to work harder to get noticed. More are betting they can catch the eye of potential investors by helping them avoid the journey up the New England Thruway.
"Being in New York—it just makes a lot of sense to make life easier for your customers," says Steven Bloom, co-founder of North Creek Butler, a hedge-fund "accelerator" that raises money for early-stage and small hedge funds.
Of the new firms starting out in Manhattan, Greenwich or Stamford, about 86% picked the Big Apple, on average, from 2003 to 2008, according to eVestment, which tracks data on about 70% of U.S. hedge-fund firms. In 2009 and 2010, Manhattan was home to an average of 92% of the fund launches. Data for 2011 suggest the trend has continued.
"There are blips in the data, but it's clear launches shifted toward New York after the crisis," says Peter Laurelli, eVestment's head of research. Source