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