News Digest:

According to the Standing Strong: Emerging Manager Survey 2024, a collaborative report by the Alternative Investment Management Association (AIMA) and Marex Prime Services, emerging hedge funds are adopting innovative strategies to remain competitive. This fourth report in the series focuses on managers overseeing up to $500 million in assets, analyzing key trends and operational strategies in a challenging environment.

The report highlights how post-COVID cost efficiencies are helping hedge funds offset rising operational expenses. While breakeven points have increased since 2022, they remain below pre-pandemic levels. Emerging managers continue to offer competitive fee structures, with average management and performance fees significantly lower than the traditional “2&20” model, providing value to investors.

Investor interest in emerging managers remains robust. Over 85% of investors source managers through personal networks or prime broker capital introductions. Encouragingly, two-thirds of investors are open to allocating to funds managing less than $100 million, and half are willing to consider managers with track records of less than a year. However, increased due diligence has extended the average time to close investments from six to eight months.

Despite fee pressures and higher costs, emerging hedge funds remain attractive by prioritizing transparency, enhancing communication, and leveraging lean operating models. As they adapt to investor expectations, these managers continue to secure allocations while offering innovative solutions to a dynamic market landscape.

The findings reflect data from surveys of managers and investors conducted in early 2024, underscoring the resilience of emerging hedge funds.

End Notes

Source: https://thehedgefundjournal.com/standing-strong-emerging-manager-survey-2024/