WEST PALM BEACH, FL (www.hedgeco.net) – A new study conducted by the Chicago based hedge fund tracker, Hedge Fund Research, shows that new emerging hedge fund managers running hedge fund portfoliosfor less than two years outperform experienced managers. While new investors are seeking more experienced hedge fund managers, some of the new managers are actually doing better in terms of achievedreturns for their investors according to the new study.

Hedge Fund Research explained that part of the reason comes from the fact that young managers need to outperform their peers to get new investors, meaning they may be willing to take more risks than more established managers. The research also showed that new funds produce their best returns during the first 12 months of operation.

The smaller the fund is, the more easily their managers can move in and out of trades, putting greater efforts in the strategies which they profit most from. The study also noted that new funds are generally more vulnerable during the first two years of their trading life.

New managers also found it harder to learn how to run their business, and at the same time manage their portfolios effectively. Hunt Taylor, director of investments at Hartz Trading, the investment arm of the Hartz Group, explained that the idea that new managers outperform more established managers makes sense.

Taylor said, “When funds are just starting they don’t have a critical mass of investors.” He said, “Therefore if they do not make returns they don’t get performance fees. Without performance fees they don’t survive. A year and a half of flat returns out of the box and you’re not in business.”

Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net

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