Two fund of hedge funds plan to launch emerging manager vehicles in the new year

United Investment Managers and Aptima Capital Management have both recently announced plans to launch fund of hedge fund vehicles focused on emerging manager hedge funds. Both managers plan to launch their vehicles at the beginning of 2010. Aptima plans to invest between 10-15 managers and will invest in equity market neutral, CTA, niche, long/short equity and option trading strategies. This news follows the results of a recent Preqin study which demonstrated that institutional backing for start-up and emerging managers is still as strong as ever despite the market turbulence of 2008. Approximately 60% of all institutional investors look to invest in emerging manager vehicles – an increase of 8% from 2008.

See on :
http://www.preqin.com/blog/101/1861/two-fohf-plan-to-launch-in-new-year/?utm_source=rssid1&utm_medium=rss

eManagerExchange : the investment management community network

eManagerExchange is an investment management community network powered exclusively by and for Emerging Managers. Aimed at promoting best practices through shared experiences and shared information, eManagerExchange is a dynamic and interactive tool that allows the exchange of information through an organized, member-maintained and administered electronic medium.

http://www.emanagerexchange.com/

Opportunities in the changing landscape of emerging hedge fund managers

Despite the turbulence and trauma that 2008 exacted on the hedge fund industry, there are those who argue that the financial markets have generated an extraordinary set of business and investment opportunities. Nowhere is this more prevalent than in the emerging manager space, as the current quality of managers looking to start or relaunch a new hedge fund, coupled with the scarcity of capital, means that active seeders can be very selective. Although it is essential for emerging managers to work with a strategic partner today (given the lack of credibility in hedge funds, costs and expertise associated with operating a fund), managers should be equally as selective when choosing a partner.

The article is on :
http://www.revereglobal.com/special_feature-rev6-1-09.pdf

The seeding dilemma: cautious investors have no appetite for new managers, but the best firms of 2012 are being created today

Why there is a dearth of seeders even as talent continues to spin out of larger firms Industry veterans recognize that now may be the best time to invest in emerging managers, however, investors don’t have much of an appetite for chance. “What investors want at this point are open, premium managers,” commented Ed Robertiello, Managing Director at Credit Suisse, who oversees the firm’s $17bln fund of funds business in the Americas. The firm managed a seeding fund that invested in a few managers during 2008, but stopped due largely to the lack of investor interest in seeding hedge funds.

The article is on :
http://www.opalesque.com/53292/%22emerging%20managers%22/The_seeding_dilemma_cautious_investors_have_no438.html

Looking For Outperformance? Invest With An Emerging Manager!

An ill-advised, persistent and costly error among institutional investors and their consultants is their reliance on large brand name money management firms to look after their assets. We had the privilege of attending and speaking at the recent Emerging Manager 2009 conference, from where we return with some very persuasive statistics that show the outperformance of small money managers over the large mainstream firms.
But first an overview over the universe’s demographics. Emerging managers encompass a wide range of firms. Joanne Infantino of the CFA Institute gave a brief overview over the emerging manager demographic. Historically, the term has been applied to minority and women-owned money management firms with a high degree of employee ownership and have less than $1 bn in assets under management. In the Altura database, the current average AUM is $257 million and average number of employees is 10.3. As a group, they employ over 8,000. Total assets held by emerging managers are $200 bn, representing a mere 1.6% of tax-exempt institutional assets. Michael Moy of Pension Consulting Alliance quotes numbers from Pension & Investments whereby only 100 mega asset management firms control 86% of global institutional assets. The Deal Sleuth believes that such a concentration of market power among so few decision makers should alarm all investors who build asset allocation models under the assumption of efficient markets with atomistic participants. As an aside, attrition rates between established and emerging firms are similar for equity managers, but emerging manager attrition is higher for fixed income.

The article is on :
http://thedealsleuth.wordpress.com/2009/06/01/looking-for-outperformance-invest-with-an-emerging-manager/

ACG : Accelaration Capital Group study (seeding)

Seeder Demand : Acceleration Capital Group's bi annual insight into the world of hedge fund seeding. Quantitative research results and written analysis available for registered ACG members.

See below the link to this study :
http://www.acceleration-capital.com/news/

The Role of Chance in Trading

I love to read books written by efficient market theorists whenever I need a laugh. The works are usually written by an academic with no practical trading experience; these writers confuse the role of chance on a trade-by-trade basis with the edge an accomplished trader creates over a large sample size. From that error, a whole host of errors follow. Let’s state this upfront: on a trade-by-trade basis, I believe the market is random - given that is driven by human buying and selling. As an example, take my in-out trade yesterday in the S&P minis (see my video) . When the market failed to cover at least 50% of the gap in the first 60 minutes, the probability was we’d see a trend day closing on its highs. But this is a probability based on a large sample size. Yesterday, the market could just have easily sold off some time after breaking up - it did not have to trend up and did not have to close on its highs. I was lucky that it did. Lucky? Given that the market on a trade-by-trade basis is random, whenever a trade works out as my analysis suggests it will, I consider it lucky. And because I don’t want the result of any one trade to be skewed towards luck, I practise risk and trade management.

The full article is on :
http://tradingsuccess.com/blog/barrometrics-views-the-role-of-chance-in-trading-987.html

Emerging Managers Summit in Chicago

If you are looking to expand and diversify your asset allocation by investing in emerging managers as well as women and minority owned investment managers, the emerging managers conference will provide the unique opportunity to access a diversified group of up-and-coming performance-oriented managers and manager of managers. The conference will explore the benefits and opportunities offered by investing in emerging managers as well as new strategies for implementing an emerging managers program. If you are an emerging manager, you will learn the procedures used by institutions to launch and maintain successful emerging manager programs. This event will showcase a variety of emerging mangers as well as minority-owned manager funds and other high potential smaller investment firms, and it will offer participants invaluable networking opportunities.

http://www.opalgroup.net/conferencehtml/2009/emerging_managers_summit_2009/emerging_managers_summit.php

Hedge funds prepare for their revival

Industry overhauls technology and processes to restore confidence and win back clients. Battered but not beaten, many hedge funds will make a comeback from the financial turmoil. But analysts say they will need to improve the technology and processes they use to make investors feel secure.

Cautious institutional investors are demanding that hedge funds use multiple prime brokers with the relevant aggregation technology, real-time risk management and stress tests, and provide transparency and accounting reports for clients. However, for many funds, the extra spending required comes at a time when net asset values, fees and revenues are falling. Keith Bliss, senior vice-president of sales and marketing at agency brokerage Cuttone & Company, said: “Any hedge fund that wants institutional money will have to have systems for trading across multiple accounts with real-time risk management functionality. It is part of the institution’s RFP [request for proposal], the first page of the checklist.”

The article is on :
http://www.wealth-bulletin.com/home/content/1053777199/

Complimentary EDHEC survey: investment managers claim to lack sufficient knowledge to manage risk optimally

The feedback received from the industry confirms that industry practitioners are largely convinced of the benefits of advanced portfolio construction techniques. In their view, the main barrier to widespread adoption of these techniques is the lack of knowledge in the industry, not implementation costs or a lack of client interest. 95% of the practitioners who responded share EDHEC's opinion that improvements need to be made to portfolio construction practices. Even though the recent events in financial markets are likely to increase investors' needs for portfolio construction that take into account extreme market scenarios for various asset classes, investment managers do not fully take into account extreme risks when constructing portfolios. They also fail to employ techniques that avoid generating overly-concentrated portfolios because of poor input estimation.

The study is available on :
http://docs.edhec-risk.com/mrk/090313_Publication/EDHEC_Publication_Portfolio_Construction.pdf

Emerging Hedge Fund Managers Outperform Older Funds

Newer hedge funds continued to out-perform their older more established brethren in 2008. In a year when equities generated returns of -40% and even the average prudently managed balanced fund and many large endowments lost around -25%, emerging hedge fund managers (defined as managers that are less than 36 months old and have AUM of less than $300m at inception) continued to deliver relative outperformance of between +180 to +400 basis points (-16% to -18.2%) compared to average hedge fund returns of around -20%; depending on which benchmark you use to measure the performance of the average established Fund. Infiniti’s own emerging manager products did even better losing only around -12% in 2008. While this is not the absolute return most investors hope for from alternative investments, it still represents a significantly better preservation of value than can be had from equities, which have continued their fall into 2009, while hedge funds have in general been flat so far. The reasons for the relative out-performance of newer managers remain that they are leaner and meaner and hungry for success. Many of the larger more established ‘brand name’ hedge funds did very poorly in 2008, with some of the largest and oldest losing more than 50%.

The article by Peter Urbani :
http://www.finalternatives.com/node/7064

Hedge fund managers "face greater scrutiny and transparency demands"

Institutional investors appear committed to hedge fund investing, but hedge fund managers will face wider-ranging and more in-depth scrutiny of operations and investment processes, according to a survey by SEI and Greenwich Associates. The survey report, entitled Hedge Funds under the Microscope: Examining Institutional Commitment in Challenging Times, points to a need for greater transparency and enhanced client reporting and communications from hedge fund managers. These are especially needed in the wake of changing institutional expectations brought on by the worst year on record for hedge fund performance. SEI collaborated on the survey with Greenwich Associates, initially polling institutional investors in Continental Europe, the UK and the US at the end of August. As the financial crisis deepened, the firms re-interviewed respondents in November, to gauge the impact of market turmoil on institutional attitudes and plans concerning hedge funds.

The whole article is on :

http://www.hedgeweek.com/articles/detail.jsp?content_id=289739

Altura Capital launches the first Global Information, Research, Data and Networking Platform for Emerging Managers

Altura Capital Group, a new York Based firm specialized in providing Institutional research and product solutions in the emerging manager category, has teamed up with a group of large institutional investors to develop a robust and comprehensive information, research and data platform with a networking component, that will bridge existing access to information and research gaps in the emerging and diverse asset manager space. Founding subscribers include the Comptroller of the City of New York, the California State Teachers’ Retirement System CalSTRS, the California Public Employees’ Retirement System CalPERS and the Illinois Sate Board of Investments ISBI. The subscription-based platform will be available to institutional investors around the globe by August of 2008. The nationwide and global network will provide institutional investors and small and emerging financial services firms the ability to collaborate and access research and information in an unprecedented manner. Market intelligence, best practices, programs and information sharing will be centralized in one comprehensive Platform.

The full article is on :
http://www.naaonline.org/index.php?src=news&refno=61&category=Pension%20Fund%20Initiative&PHPSESSID=3650c44fb4cb624742077019f119bd59

The company website :
https://www.alturacap.com/

The regulatory climate for hedge funds

Hedge fund managers anticipate increased regulation under the new presidential administration with the majority of senior partners at US firms expecting rising compliance costs making hedge funds more costly to operate. Over 98% of senior hedge fund managers reported that the new US presidential administration is likely to increase regulation of the hedge fund industry, according to the survey. An overwhelming majority also suggested that associated compliance costs will make hedge funds more costly to operate, with over 80% of respondents in agreement. While just over 75% of participants suggest that the overall impact of the new administration will be negative, most reported that increased regulation will not lead to more fund closures or fewer start-ups. It’s a generally accepted behavioural concept that uncertainty creates negative emotions. The financial services industry in particular has always been leery of the unknown, as uncertainty magnifies risk. Consequently, we expected our findings to show a degree of scepticism regarding the new administration and its regulatory agenda. The election’s focus on the economy left many with the impression that regulatory reform will be a priority for the new regime. While the scope of these efforts is not yet defined, it is apparent that the hedge fund industry believes that regulatory action is on the horizon.

The article is on :
http://www.thehedgefundjournal.com/magazine/200812/research/a-new-regime-the-regulatory-climate-for-hedge-funds.php

What Next for the Hedge Fund Industry?

Special to AllAboutAlpha.com by: Peter Douglas, CAIA, Founder, GFIA pte.
The future will (not ‘may’) hold many surprises, and some could make a huge difference to our world view. However, here are our thoughts on how the hedge fund world may pan out over the next 2-3 years.

In summary, the hedge fund world will (i) see higher returns (ii) see strong new manager formation (iii) be dominated by small boutique managers (iv) have relatively few very large funds.

The full article is on :
http://allaboutalpha.com/blog/2008/11/30/douglas-issues-bold-hf-forecast-golden-age-of-higher-returns-new-managers-smaller-funds-on-its-way/