Hedge funds: News
Hedge fund broker's clients outshot US stock-market indices last year 30/01/2007
Author: Stuart Fieldhouse
Emerging managers are hungry for success, and it shows in their performance numbers, according to one US securities firm.
VanthedgePoint, a financial services firm which services emerging hedge funds, announced that hedge funds that are clients of its broker/dealer subsidiary, VanthedgePoint Securities LLC, generated average returns of 16.74% in 2006. This is better than the major hedge fund and US stock-market indices. Indeed, the mean performance numbers beat major hedge fund indices by over 300 basis points last year.
VanthedgePoint points to the fact that it deals with emerging hedge fund businesses - i.e. those that are relatively new - as the reason behind the success of its clients. "Our clients' performance in 2006 confirms academic research that suggests emerging hedge funds outperform their larger peers," said Geoffrey M. Tudisco, chief executive and founder of VanthedgePoint.
Accepted wisdom amongst seasoned investors in hedge funds is that newer managers are more likely to 'shoot the lights out', achieving better performance figures in their first three to five years in business than they would later in their careers. It suggests that a level of complacency creeps in, particularly as funds are closed to new investment, and the principals of the investment firm become wealthier, and potentially more complacent.
"Hedge fund investor interest in our client base…continues to be astounding, demonstrating the high level of interest in identifying promising emerging managers," Tudisco said. "Our ability to introduce investors to our clients allows us to add significant value."
VanthedgePoint was launched last year, with the aim of 'levelling the playing field' between smaller, emerging hedge fund managers and more established firms with billions or dollars under management. It helps its client set up cheaper and more efficient investment management operations, allowing them to pass on their cost savings to investors.
Related Links
US hedge fund manager prosecuted for insider trading
A hedge fund manager has pleaded guilty in a US federal court to five counts of insider trading for having aggressively purchased Citizens Bank common stock and options based on a tip he received from a Citizens employee about the bank's then-impending merger with Cleveland-based Charter One Financial.
Introduction to Hedge Funds
Hedge funds are specialised investment funds that are rarely made available to ordinary private investors, although in reality much of the growth in this industry has come from wealthy private investors.
