Young bucks challenge for supremacy but are fought back in 2009: Study
| Nov 1st, 2010 | Filed under: Performance, Analytics & Metrics, Today's Post | By: Alpha Male |
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As funds of hedge funds continue to refine their value proposition in the wake of the Madoff fiasco, more and more discussion seems to focus on the critical role of funds of funds in aggregating and delivering niche sources of alpha. Some researchers have gone as far as to attach a sociological significance to FoF’s intermediation role between end investors and idiosyncratic hedge fund managers (see post). Fewer funds of funds, the argument goes, means fewer creative single managers.
There’s now a large body of research that suggests smaller managers do, in fact, deliver higher returns than large ones – even when the usually database biases are neutralized. However, as we reported early last year, 2008 provided a notable exception. That year, a study by data provider Pertrac found that smaller funds performed worse than large ones.
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