New York (HedgeCo.Net) – Small hedge funds with assets of less than $100m have outperformed large funds (those with assets of over $500m) in 13 out of the last 16 years according to Jeroen Tielman, CEO and Founder of multi-strategy hedge fund incubation platform IMQubator.
Alluding to emerging managers as ‘speedboats’ and larger funds as ‘supertankers’, Tielman noted: ‘It’s clear that speedboats are better equipped to explore and navigate the unknown, uncharted waters that make up the “new normal” of the current political and economic environment. Supertankers need a longer time to test the waters and change course, while they need to be prudent to stay in deep waters only. The present economic climate favours the quick and nimble and might punish the large, slow and cumbersome.’
Tielman adds that the ‘new normal’ makes it imperative for institutional investors to shake off their torpor and make allocations to more nimble funds with multiple return drivers and better transparency and governance. Emerging managers deserve to be included by institutional investors in the core of their hedge fund exposure.
A further advantage to investors in early stage funds is the unique moment of alignment and the diversification that younger managers offer to a portfolio, within the safety frame provided by an all-round and ‘partner type’ of investment manager, such as IMQ.
A new report from PerTrac, Impact of Size and Age on Hedge Fund Performance: 1996 – 2011, also states that early stage managers are better positioned to benefit from current market conditions.
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