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Emerging hedge fund managers optimistic on 2012 prospects, survey says

Date: Wednesday, December 14, 2011
Author: The Asset

Emerging managers expect their hedge funds to achieve gains of 10 percent or more in 2012, according to the Global Alternative Investment Management (Gaim) USA survey of emerging hedge fund managers. The survey of 90 emerging managers (defined as having USD250 million or less in assets under management or AUM) found that 61 percent of the managers expect their portfolios to earn more than 10 percent, net of fees, while 31 percent of them expect to earn 15 percent or more.

 Gaim, an organizer of alternative investment conferences, also found that while emerging managers overwhelmingly (81 percent) cited “raising assets” as their biggest challenge, 40 percent expect to raise more than USD50 million in new capital in 2012. If successful, that would mean a doubling of AUM for the smallest funds in the survey, and a 20 percent increase for the largest ones. The task of raising those assets will fall heavily on marketers outsourced by the emerging managers. When asked which activities they were looking for external partners or vendors, 41 percent listed marketing, followed by prime brokerage (37 percent) and compliance (30 percent).
“The survey tells us that emerging managers are almost by definition brimming with self-confidence” said Amanda Rodrigues-Cheung, Gaim event director. “Obviously, they have to think that they can outperform the markets, or they would not launch their funds.”
Gaim conducted its survey of emerging managers in early December 2011 ahead of the Gaim USA Hedge Fund Conference in Boca Raton in January 2012. Full results will be released at the conference. The survey was conducted to take the pulse of this subset of the hedge fund industry which, on the one hand, has found it difficult since 2008 to raise capital and, on the other hand, is receiving increased attention from investors who think smaller, more nimble funds are more likely to outperform their larger peers.