In Part 2 of Opalesque.TV's interview with Deepak Gurnani, Head of Hedge Funds at Investcorp, Deepak describes the great misallocation: the wave of institutional money that has flowed into hedge funds over the past decade was predominantly allocated to the largest hedge funds. It is estimated that over 90% of all institutional money going into hedge funds has disappeared into the largest funds, multi-billion dollar behemoths that appeal to institutional investor demands for vast, institutional quality infrastructures.
However, comparing the performance of two asset extremes (large funds with $5bln or more vs emerging funds with 3 years or less of history), research shows that over the last 7 years emerging funds not only outperformed large funds on a risk adjusted basis, but that most of this outperformance came in 2008-2009. This means, that while investors are flocking to large funds for “safety”, as a group those large funds let down investors when safety was needed the most in 2008-2009.
Furthermore, according to Gurnani, these institutional over-allocations to large funds will lead to a dilution of returns and may be a source of disappointment for institutional investors in the years to come.
In addition, learn about the following:
• Investcorp’s Emerging Manager Program: The process and value of identifying and seeding institutional quality emerging managers
• Where and how hedge funds best fit into institutional portfolios
• Why 5-10 % allocation to alternatives will be a challenge going forward
• Single step optimization: Organize beta factors and hedge fund exposures into a single framework
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In Part 2 of Opalesque.TV's interview with Deepak Gurnani, Head of Hedge Funds at Investcorp, Deepak describes the great misallocation: the wave of institutional money that has flowed into hedge funds over the past decade was predominantly allocated to the largest hedge funds. It is estimated that over 90% of all institutional money going into hedge funds has disappeared into the largest funds, multi-billion dollar behemoths that appeal to institutional investor demands for vast, institutional quality infrastructures.
However, com
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