Friday, 30 January 2015
Last updated 9 hours ago
Jan 15 2013 | 1:28pm ET
New York City is already the largest hedge fund center in the world. A tough fundraising environment is helping it expand and solidify that claim.
While nearby Connecticut has made a run at a number of Manhattan hedge funds in recent years, the Big Apple is apparently the place to be for startups. Between 2009 and 2010, Manhattan accounted for a startling 92% of hedge fund launches among new firms choosing between it, Greenwich, Conn., and Stamford, Conn., according to eVestment. The trend towards Manhattan—86% of new hedge funds picked it over Greenwich and Stamford from 2003 to 2008—seems to have continued in 2011.
"There are blips in the data, but it's clear launches shifted toward New York after the crisis," eVestment research chief Peter Laurelli told The Wall Street Journal.
Hedge funds are picking Manhattan—and especially the so-called "Golden Rectangle" in the heart of Midtown—to make it easier for institutional investors to meet with them. Bank of America's prime brokerage, which pushes clients toward the area bounded by Third Avenue, 62nd Street, Seventh Avenue and 42nd Street, tells its hedge funds that being elsewhere could cost it between 10% and 20% of potential investor meetings.
"There were enough roadblocks to establishing a new fund that I didn't want to create another," Chris Hentemann, who set up his 400 Capital Management in Stamford in 2008, but spent only a few months there before moving to East 49th Street, told the Journal. "I can capture that investor that may not have made that trip up to Greenwich, but they had an opening in their schedule an hour before they had to go to JFK to go back to Europe."
Hentemann added that New York also offers less tangible benefits, such as serendipitous conversations with bankers.
Office space in Manhattan has also gotten cheaper, attracting firms not only from Connecticut but from elsewhere. Former PIMCO manager Michael Pascutti chose Manhattan over Newport Beach, Calif., where both he and PIMCO resided.
"Conference calls just don't go over the same way," Jonathan Bloom, chief operating officer at Pascutti's Eagle River Asset Management, said.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…