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.