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Opalesque – Perspectives  

New Managers  |  Issue 34  |  January 2015

Stonehaven predicts increasing number of small managers will close down

Stonehaven, LLC published their forecast for top alternative investment trends for 2015. Among them, they expect an increasing number of small managers will shut down while an increasing number of larger managers will seek GP monetization events.

“With approximately 15,000 global hedge funds in business today, the vast majority likely aren’t adding enough value for their investors to exist in the first place,” the report says. “Recent sub-par industry-wide returns also reflect that the “average” alternatives manager is underperforming expectations. Most are also sub-scale to run an institutional infrastructure. Highly fragmented industries eventually consolidate as they mature, and the alternative investment space is no different. On the opposite end of the spectrum, we expect to see increasing monetization events for more mature managers including selling stakes to private equity firms and IPOs.”

They also expect that while emerging and mid-sized managers will likely provide the most compelling returns, the largest managers are most likely to continue attracting the most capital.