Why It Pays To Invest In Emerging Managers

The Palico Key Trends Report published last week focuses on the growth in demand for emerging managers and notes first-time fund outperformance as an essential factor.  Referencing its own analysis as well as findings from Preqin, Palico reports the following, among other findings:

  • The percentage of investors who [say] that they will invest in first-time funds nearly doubled between 2013 and 2016, increasing from 19% to 34%
  • In 2018, approximately 30% of the 3,300 funds in the market were first-timers
  • Based on a 12-year comparison of median net IRRs, first-time funds beat out established managers every year between 2000 and 2012, except for 2004.

Why the outperformance?  Among other reasons mentioned in the report: emerging managers often provide innovative strategies allowing investors diversified investments in niche sectors not previously or adequately addressed by existing private equity managers – thereby providing the potential for greater alpha.  Please read the entire story:  https://blog.palico.com/2019/02/placing-your-bets-on-a-young-buck-why-it-pays-to-invest-in-emerging-managers/

Meteor5 Capital, with its seasoned team of manager selection professionals, provides support for future leaders in private equity even before they commence fundraising.  Please reach out to us at contact@meteor5cap.com to learn how Meteor5 can help grow your business.