Progress report
An assessment of hedge fund YTD performance in the face of renewed fears for a potential eurozone crash Read More
Against the backdrop of difficult market conditions and growing investor…
11/01/2012
Encouraging inflows look set to continue into 2012, but, once again, the big names are poised to attract the big bucks in Q1. Hedge fund platforms, especially those styled as asset managers rather than hedge funds per se, should be first port of call.
“In this segment of the market, flows will be dominated by consultants and a ‘herd mentality’,” says Tommaso Mancuso, head of research at fund of hedge funds Hermes BPK. Of course, as larger managers close for new subscriptions and/or return capital, “investors will cast their nets wider and we should see capital placed more widely in the industry as a result,” adds Marion Mulvey, head of alternatives for Emea at Citigroup’s admin division.
However, it seems safety in brand recognition is no longer enough. Many investors have been irked by the “boring” returns, as one investment consultant put it, at larger managers, and are already looking down the ladder for more exciting opportunities.
“The most sophisticated institutional investors and private investors (such as family offices) will capture the opportunity to invest in smaller hedge fund managers in return for a revenue share,” agrees Mancuso.
The message from investors continues to be one of balance without compromise; exciting returns, with strong systems. “It’s fine for them to see a boutique when they look under the bonnet,” says Mark Martyrossian, partner at Tiburon Partners, “but they basically want Canary Wharf when they look in the boot.”
It might not happen straight away, but smaller managers could be set for some love in 2012. They might just have to wait – or survive – until H2.
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