While European and North American investors are shying away from investing in emerging manager hedge funds, Asian investors are increasingly keen to commit to such funds, the latest Preqin research shows. Fifty-eight percent of investors in the region are prepared to invest in emerging manager hedge funds, compared to 39% of European investors and 48% of those in North America.
Emerging manager hedge funds are generally considered more risky due to the manager’s lack of track record; as investors remain cautious about making new hedge fund investments it is perhaps understandable that they would be less keen to commit to emerging funds. However, Asian investors were generally less affected by the downturn than those based elsewhere, which could explain their continued, and indeed increased, confidence in the asset class and their enthusiasm for emerging manager funds.
“Over the past three years fundraising conditions for newer funds have become increasingly difficult as many institutions eschew emerging managers in favour of vehicles with longer track records,” says Amy Bensted, manager, hedge fund data at Preqin. “However, our results indicate that nearly half, 48%, of investors would still invest or consider investing in emerging managers, even in this difficult fundraising environment. In 2012, emerging manager vehicles are likely to appeal to investors disappointed by the returns from their existing hedge fund portfolios. Similarly, with fees also a key issue for institutional investors at present, emerging managers willing to negotiate fund terms with potential investors could also be successful in attracting capital.”
