FCA Sees Hedge Fund Seeding Environment Improving in 2011

Feb 14 2011 | 8:53am ET

Patric de Gentile-Williams of FRM Capital Advisors, a leading hedge fund seed investor, says the industry seeding environment will continue to improve in 2011.

The higher cost of launching hedge funds will increase the importance of strategic investors, says Gentile-Williams. Meanwhile, the quality of hedge fund manager seeking capital will also improve:

“The wave of proprietary traders spinning out on their own as a result of regulatory changes will increase the talent pool at the top end of the quality spectrum. With markets stabilizing, we also believe that more people already in the hedge fund industry will have the confidence to launch their own funds.”

Gentile-Williams says many 'new’ hedge funds are actually teams that have worked together for years and “have proven success in running money and controlling risk." Such teams, he says, are attractive to seeders.

“If the hedge fund industry continues to produce similar returns to recent years and the appetite for hedge funds continues,” says Gentile-Williams, “the prospects for seeding are excellent. Well-structured, smaller funds run by established teams are set to benefit. There are signs that investors are increasing allocations to hedge funds and diversifying away from the mega-size multi-strategy funds.”

FCA, part of London-based alternatives manager FRM Capital, had $290 million in assets under management as of October 2010.


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