Tony Griffiths

14/09/2011 Author: Tony Griffiths

Quality launches keep inflows ticking over

How’s 2011 panning out for the hedge fund industry? Well, it depends where you look. Isolate performance and you’re likely to wince. Take a peek at inflow figures, meanwhile, and you’ll be pleasantly surprised. A confusing case of chalk and cheese? For some, the answers lie in the start-up sector.   

“The quality of launches has definitely gone up,” says one senior executive in prime brokerage. “The barriers to success are higher, so those people that go for it know what’s required.”

Much has been made of the influx of prop desk talent flooding the industry, and it appears investors have taken note. While launch numbers remain healthy if unremarkable, the average launch size is going through the roof.

Having incubating for two years within Deutsche Bank as the firm’s emerging markets rates and FX desk, newly formed Avantium Investment Management has an established team, strategy and structure. The firm launches its first fund in October with over $200m in assets.  

Prop desks haven’t been the only source of institutionally forged hedge fund talent. Whether it’s Appaloosa’s Matthew Knauer, Shumway’s Paul Hudson or Harbinger’s Lawrence Clark, more and more hedge fund titans are seeing their star executives go it alone.

“There are more second-generation hedge fund managers launching funds; number twos at big firms with existing track records,” notes the prime brokerage executive.

The big names though are a misnomer – the common factor is the set-up. In 2011, team, calibre and structure rule the roost. And, for now, wider industry disappointments will not stop firms consisting of such magnetising capital.

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