Preqin: Fewer institutions taking chance on emerging hedge fund managers

Institutional investors are losing their appetite for emerging hedge fund managers, Preqin said in its November report on emerging hedge funds.

The alternatives research firm said 38% of institutions indicated a willingness to invest with young firms this year vs. 42% in 2012 and 48% in 2011, according to Preqin.

Hedge funds-of-funds managers showed the most willingness to invest with new hedge fund firms, at 73%, followed by other money managers, 46%; family offices, 43%; endowments, 39%; insurance companies, 36%; wealth managers, 30%; public and private pension funds, 21% each; and foundations, 20%.

About 45% of all institutional investors required a minimum three-year track record before considering an emerging hedge fund, while 26% of Preqin's institutional universe insisted on a minimum four-year track record. Another 18% wanted two-year track records and 11% were satisfied with one year or less, Preqin said.