Institutions Show Appetite For Emerging Hedge Funds

May 27 2008 | 10:30am ET

With hedge fund assets under management reaching US$3 trillion and new hedge funds appearing every month, institutional investors say they’ll invest in newbie hedge funds, specifically spinout teams.

According to a Preqin Hedge survey of 50 institutional investors, 46% will invest in emerging manager hedge funds, and the number grows to 56% regarding spinout teams. Just 8% said they will provide seed capital to new vehicles.

When it comes to experience, 39% of respondents required a two-year track record or less, while 24% of institutions surveyed said they would not invest in a hedge fund unless the manager had more than five years of fund management experience. And 6% of institutions reported that they required no specific track record.

“With so many new investors entering the hedge fund market place, competition for access to the best funds and the best sources of returns is increasing,” said Amy Bensted at Preqin Hedge. “With the institutional market maturing, many investors are now using their knowledge and resources to invest in younger, less well established managers to gain access to the next generation of star managers.”

And just how much money does a manager need to entice institutional investors? Forty percent of institutional investors said they would invest in funds that had between US$100 million and US$500 million in total assets, while 17% of respondents demanded no requirements of potential hedge fund managers in terms of assets under management. And only 11% of institutional investors would only invest in a fund provided it had at least US$1 billion in AUM.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.