Enjoy this complimentary article from Hedge Fund Alert, one of the four publications inGreen Street's News product suite.Sign up for a free trial!
Texas is attracting a disproportionate number of new managers.
In the past five years, the number of fund-management firms in the Lone Star State has jumped 27% to 136, according to Hedge Fund Alert’s Manager Database. During the same period, the total number of firms operating in the U.S. has increased 8% to 3,172. Meanwhile, manager rosters in the hedge fund bastions of New York, Connecticut and Illinois have shrunk. The Manager Database captures firms reporting to the SEC either as registered investment advisors or so-called exempt managers.
Based on its share of hedge fund businesses, Texas now ranks fifth, while Illinois slipped to sixth position with 116 firms, down from 121 five years ago. New York ranks first with 1,056 managers, a drop of 47 since 2014 but still almost a third of the nationwide total.
Houston has long been a magnet for energy-focused funds, but much of the recent launch activity has centered around Austin and Dallas, encompassing managers pursuing a range of investment strategies. The number of hedge fund firms in the Austin metro area has more than doubled since 2014 to 23, while the count in the Dallas metro area has increased to 73, from 63.
Several well-pedigreed managers are in the process of setting up shop in Dallas. They include Brad Stephens, who recently left a portfolio-manager post at Scopus Asset Management in New York to form Six Columns Capital. He aims to raise at least $100 million for a consumer-stock vehicle that could begin trading before yearend.
Other Dallas-area startups include Avidity Capital, a healthcare-focused shop led by former Highland Capital executive Michael Gregory and former Citadel portfolio manager David Witzke; BWCP, led by former Citadel portfolio manager Brandon Wier; and Sagefield Capital, led by former Citadel portfolio manager Mark Schlueter and former Highland executive Jonathan Lamensdorf.
A number of factors have contributed to the expansion of Texas’ hedge fund sector, including a lower cost of living compared to states on the East and West Coasts. And Texas is one of only a few states that don’t have an income tax. Both of those factors translate to lower startup costs for hedge fund managers, who can offer leaner pay packages than their peers in California and New York.
“With the continued downward pressure on fees, it makes a lot of sense, especially for certain strategies, to be able to launch in a more affordable area,” said the chief financial officer at a Texas fund shop. “Sure, there are disadvantages to not being in a major commercial hub like New York or Chicago or San Francisco. But there is still an abundance of wealth in the area.”
What’s more, ultra-wealthy individuals and families in Texas are more inclined than those in other states to hire local investment firms to run their money.
“People there prefer to give their money to local managers and keep it in their own economy, as opposed to some outsider showing up from New York,” a family office advisor said. “If you like living in Texas, even if you’re not from Texas, it’s a very welcoming place. If you move from somewhere else and embrace what Texas is all about, they’ll like you. And maybe they’ll give you money.”
Industry professionals also point to the state’s richly funded endowments and pensions — including Texas Teachers, University of Texas and Texas County & District Retirement — which have long been known for aggressively allocating to hedge funds. Last year, the $28 billion Texas Employees Retirement formed a joint venture with Pacific Alternative Asset Management to deploy $3 billion of seed capital to new and emerging hedge fund managers.
The state’s hedge fund field is led by HBK Capital, with gross assets of $29.7 billion; Maverick Capital ($13 billion), Carlson Capital ($12.9 billion) and Crestline Investors ($5.5 billion). Among the few notable liquidations in recent years was Lee Hobson’s Highside Capital, a once-$5 billion firm in Dallas that shut down in 2013.
But several Texas investors noted that the demise of Highside spawned at least a half-dozen launches in the Dallas area, including some that were seeded by Hobson. Among them: Andrew Sinwell’s N2 Capital, Joseph O’Brien’s AlphaMine Partners and Jonathan Gattman’s Cloverdale Capital.
More recently, the burst of startup activity has caught the attention of hedge fund service providers. Among them: prime brokers BTIG and Jefferies, each of which has added staff in Texas this year. BTIG installed Steve Stich in Dallas to oversee its prime-brokerage operations in the region. Stich, who has worked at Tarpon Capital and U.S. Trust, joins prime-brokerage salesman Joseph Vacca and about a dozen traders who are stationed in Texas.
Jefferies hired Alice Kennon from Bank of America to beef up its prime-brokerage sales efforts in Texas. Kennon, who divides her time between Texas and California, is working with Katie Dillard, who oversees capital-introduction functions in California and the Southwest.
*Green Street News is not a product of Green Street's advisory business. It is an independent business unit of Green Street Advisors, LLC. Green Street maintains information barriers to ensure the independence of the News unit and the research and advisory services provided by Green Street.
FAQs
Newport Beach, Calif., June 25, 2021 – Green Street has sold Hedge Fund Alert, one of its leading U.S. News publications that provides exclusive intelligence on the fund-management business, to Pageant Media, the global business information and events provider focused on the asset management industry.
What are emerging markets hedge funds? ›
An emerging market fund is a type of mutual fund or ETF, which invests heavily in securities of varying asset classes—stocks, bonds, and other securities—from developing or emerging market economies. The most common places where these funds invest in include India, China, Russia, and Brazil.
How much is Hedge Fund Alert? ›
Every week, Hedge Fund Alert delivers the fresh intelligence needed to identify money-making openings in the fund-management arena. The newsletter is recognized for routinely spotlighting key industry developments that haven't been reported anywhere else. Subscription price: $4,697 for 46 weekly issues.
Is Millennium a good fund? ›
Millennium remains one the biggest and most successful hedge fund platforms in the world. The longevity of the firm and its successes have allowed for them to be the preferred option for talent when up against competitors even if perhaps, the other offers had slightly better components to their set up.
Why should you invest in emerging markets? ›
The U.S economy is the biggest in the world, but it hasn't been the fastest growing. Emerging markets can offer an investment opportunity for growth and diversity in your retirement portfolio.
What is the outlook for emerging markets? ›
Emerging markets' growth will likely halve, compared to 2021, reaching around 3.4% in 2022. Commodity importers will be hit harder than commodity exporters.
What is pageant media? ›
An independent business information provider. Pageant Media - Specialises in Captive Insurance, Hedge Funds, e-Gaming, Emerging Market and Private Wealth. We operate specialists events and conferences, training seminars, magazines, websites and data products.
What is traditional fund intelligence? ›
Traditional Fund Intelligence is the leading platform of news, data, analysis, networking & insight for the US Retail and Institutional space.
What is the most prestigious hedge fund? ›
Bridgewater Associates is one of the top hedge funds in the world, with more than $235 billion in assets under management. Its founder, Ray Dalio, started the firm back in 1975 and has become one of the best-selling authors in the financial space.
Is Millennium a good hedge fund? ›
Millennium is routinely one of the most profitable hedge funds in the world, the apotheosis of what the multi-strategy model can achieve. The $58 billion-in-assets behemoth has over 260 individual teams and about 3,000 employees, and it's lost money once in the past three decades.
The estimated total pay for a Portfolio Manager at Millennium is $204,433 per year. This number represents the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users. The estimated base pay is $122,362 per year.
Are emerging markets a good investment right now? ›
Emerging markets (EM) equities (MSCI EM Index) outperformed developed markets (MSCI World Index) in the second quarter, finishing down approximately 11% compared to down 16%, respectively. This marks a nearly 18% decline for the first half of 2022 for EM versus an almost 21% decline for the developed world.
How many emerging markets should be in a portfolio? ›
Currently, emerging markets have a 26% share of global market cap, up from 19% in 2009. Note that this share is still lower than the EM share of global GDP (39%).
Does Vanguard have an emerging markets fund? ›
Fund management
Vanguard Emerging Markets Stock Index Fund seeks to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index.
What is the difference between emerging markets and developing markets? ›
Developing countries are the countries that have not seen any significant growth in their economy due to sticking to traditional growth practices such as agriculture. Emerging markets are the countries that have witnessed massive economic growth due to the development of industrial and technological sectors.
Why do companies target emerging markets? ›
As emerging markets progress, they often experience the rapid income growth they set out to create. As more people within a country rise out of poverty, a consumer class develops which leads to a marketplace full of consumers who are hungry for new products and services.
Which countries could be considered the emerging market for the next 3 5 years? ›
Top 7 emerging markets for the next decade
- China.
- Indonesia.
- India.
- Malaysia.
- Brazil.
- Chile.
- Poland.
Examples of emerging markets include many countries in Africa, most countries in Eastern Europe, some countries of Latin America, some countries in the Middle East, Russia and some countries in Southeast Asia.
What is an emerging market example? ›
Currently, some notable emerging market economies include India, Mexico, Russia, Pakistan, Saudi Arabia, China, and Brazil. Critically, an emerging market economy is transitioning from a low income, less developed, often pre-industrial economy towards a modern, industrial economy with a higher standard of living.
What industries are emerging? ›
Examples of current emerging industries include artificial intelligence (AI), robotics, virtual reality, self-driving cars, and biotechnology.
Pageant Media Management Team
Pageant Media's founder is Seb Timpson. Pageant Media's current Chief Executive Officer is Charlie Kerr.
What is fund direction? ›
Fund Directions offers market-leading insight into the latest industry, regulatory and legal developments impacting fund directors. Our coverage and events focus on how boardrooms across the US are tackling a range of governance priorities.
What kind of hedge fund is Millennium? ›
Millennium Management is an investment management firm with a multistrategy hedge fund offering. It is one of the world's largest alternative asset management firms with over $50 billion assets under management.
What is Millennium investment strategy? ›
For its Millennium Partner funds, the firm uses investment strategies that are global in scope and broadly diversified, according to its brochure. Millennium's four primary investment strategies include relative value fundamental equity, equity arbitrage, fixed income strategies and quantitative strategies.
How much do Millennium analysts make? ›
The estimated total pay for a Analyst at Millennium is $98,459 per year.
