Are Institutional Investors Fishing In The Right Pond?
There has been a lot of buzz in recent years in the alternative space about ‘emerging’ hedge fund managers. Programs are being launched throughout the institutional investor community to dedicate funds to this “asset class.”
- Credit Suisse points out that “research of returns from January 1996 through December 2010 indicates that smaller hedge funds (less than $100M in AUM) have historically outperformed larger hedge funds (greater than $500M AUM) by 3.95% annually.” 1
- Pertrac notes that “the average small fund has outperformed the average mid-size fund and average large fund in 13 out of the last 16 years.” 2
- Barclay’s Capital notes that “quantitative, academic analysis of data shows that, on average, smaller, younger funds tend to outperform their larger, older peers, although the higher returns of small funds may be offset by the greater level of risk they pose. “ 3
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