The way capital is allocated to funds is inefficient: 89% of industry assets are managed by just 11% of hedge funds.¹
Emerging teams have structural and motivational advantages.
- Smaller / emerging firms have averaged +20% greater annual returns than larger firms.
Persistently higher returns can be found in emerging areas with structural advantages and less competition.
- Misunderstood and inefficient markets
- Gaps in analyst training and fund mandates
- Market dynamics that move prices for non-economic reasons
- Specialization or capacity constraints that reduce competition
- Structures or tools that create competitive advantages
- Jump steps in research and understanding investor behavior
- Evolving regulations