NEW YORK (HedgeWorld.com)–With an influx of new investors worried about capacity constraints in the hedge fund industry, capital-introduction events are increasingly attracting embryonic funds that are often winning allocations even before trading starts.
That’s according to Jane Halsey, the founder of the Roundtable Forum, which has been bringing together hedge fund managers with prospective investors at regular gatherings since 1999. “There was a time when investors would demand at least 12 data points on a track record before considering an allocation. But things have changed and investors are looking at managers pre-launch. There’s definitely a shift,” Ms. Halsey said.
Interest in pre-launch funds is being driven in part by a growing number of incubator groups looking to forge relationships with managers early on and swap seed capital in exchange for fee-sharing arrangements. There’s also interest from investors, including funds of funds, seeking to form ties to new talent early on, Ms. Halsey said.
“Some funds may have shorter track records, but they may not have difficulty in attracting capital if the managers have run portfolios before–for example, a mutual fund,” she said.
The Roundtable Forum isn’t the only venue that has emerged in recent years to bring together accredited investors with rising stars of the hedge fund industry. Prime broker groups are increasingly offering free capital introduction services to hedge fund clients they provide clearing services to.
Ms. Halsey admits the field has gotten a bit more crowded of late, when it comes to facilitating match-making sessions between managers and investors. “It might only be a slight exaggeration to say that you could do breakfast, dinner and lunch for a five days in a row, it seems,” she said.
Ms. Halsey said she founded Roundtable Forum after becoming frustrated with large industry conferences during her years working as a third-party marketer. “It seemed like some of these conferences were invasion Bermuda and didn’t provide the face-to-face meetings and intimacy that investors wanted with fund managers.”
“What we do is keep the numbers low and aim for a ratio between investors and managers that makes sense–a format where you really could ask questions and have them answered,” Ms. Halsey said.