It’s a worst kept secret that alpha in hedge funds is frequently realized with smaller "emerging" managers as larger funds outgrow their strategy’s ability to generate non-correlated returns.   More institutional managers are acting on the realization that some of their larger funds have become more asset accumulators than alpha generators and are switching investment to emerging managers.  Calpers, NJ, NY and Illinois all have programs for emerging managers as does Duke University.  

PI Online reports that more institutional quality investors are taking deeper looks at emerging managers and their strategies to generate alpha.  

Albourne’s Richard Quigley says 

"We are seeing broad and significant interest in making increased allocations to emerging managers. Actual activity (i.e. funding) has been light, but we believe we are in the early innings”

Busara Advisors, a New York fund of funds received $150 million from a large California based pension fund.  

You can find out more here - http://bit.ly/jIoXpO

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Merlin Securities released their latest research article, this time focused on helping hedge fund managers identify, understand and market to the right investors.

The white paper, titled “The Spectrum of Hedge Fund Investors and a Roadmap to Effective Marketing,” analyzes the 10 most common types of hedge fund investors (from “Partners, Friends and Family” to “Sovereign Wealth”) along a spectrum from the least “institutional” to the most. The article then defines a four-stage marketing program designed to help funds identify and effectively reach the types of investors most appropriate for their respective funds.

The article includes two helpful charts and some interesting context on the current environment for hedge fund managers and their investors. Interesting reading as always from Merlin.

The full article is available here: http://merlinsecurities.com/pr/spectrum.pdf

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As 2010 begins the Hedge Fund industry looks at a new wave of investment from institutional investors.   Some Global Pension Funds are vastly under-funded from past traditional strategies in markets that have moved cumulatively side to side for several years and are jumping into the hedge fund space head first rather than dipping their toes. 

Max Gottschalk, head of Gottex, says "There has been a clear change of attitude toward hedge funds between 2009 and now. Many institutions say they will up allocations, and private investors who stayed on the sidelines for much of 2009 are now coming back," 

Further, Gottschalk says, "individual investors and private banks are likely to focus on the more liquid hedge fund strategies while institutions were likely to diversify across all strategies." and "Some of the less liquid strategies like relative value and convertible arbitrage did extremely well in 2009 and the environment seems good for 2010. These strategies will likely attract institutional investors,"

More information here, http://bit.ly/8hkq0Y

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The Harvard Crimson reports that Harvard has redirected much of its equity allocations.  Endowment allocations in September, 2008 totalled $2.9 billion.  After the market bubble burst, Harvard equities allocations plummeted to $571 million.  Public equities allocations have now risen to $772 million.  Increases in the number of holding entries has gone from 71 in the prior quarter to 99 in the most recent reported quarter.  Two-thirds are new investments . 

Harvard has increased it’s share in emerging market ETFs by almost $50 million. 

More info can be found here, http://www.thecrimson.com/article.aspx?ref=528225

http://www.hedgeweek.com/articles/detail.jsp?content_id=329543