Rookie Hedge Fund Managers Score Big

Date: Tuesday, January 30, 2007

Emerging hedge fund managers outperformed not only all major hedge fund indices in 2006 but also leading U.S. stock indices save one. According to VanthedgePoint Group, clients of its VanthedgePoint Securities platform saw returns of 16.74% last year, outpacing by more than 300 basis points the likes of Eurekahedge Index (13.4%), Hedge Fund Research Index (12.99%), HedgeFund.Net Index (11.76%) the Barclays’ Group Hedge Fund Index (12.35%) and the Hennessee Group Index (11.36%), to name a few. The year-end statistics support scholarly research published over the past couple of years about the "rookie effect," the fact that young HF managers perform better as they are eager to prove their mettle – and attract new clients -- by taking bigger risks in an effort to demonstrate their talents. Generally, hedge funds had a good year in 2006, but still trailed major stock indices – except for the emerging managers tracked by VanthedgePoint. Its 16.74% showing last year surpassed the 16.29% of the Dow Jones Industrials Average and S&P500’s 13.62%, and was well ahead of Nasdaq’s +9.52% growth. The only indicator to finish ahead of the emerging HF managers using the VanthedgePoint platform was the Russell 2000 Index, which climbed 18.4%.