Emerging hedge fund managers continue to outperform — well beyond the 2019 Preqin/50 South study
Emerging hedge fund managers continue to outperform — well beyond the 2019 Preqin/50 South study I cited in the article below.
But despite stronger results, they remain structurally underfunded.
Recent research confirms the pattern:
→ AlphaWeek (2025): Smaller, newer funds are nimbler, hungrier, more focused — and more closely aligned with investors.
→ Returns data (NAIC, 2025): Top-quartile emerging managers outperform by ~250bps on average and hit top-quartile results 34% of the time vs. 25% for established peers.
→ Fundraising data: 10 megafunds captured 44% of U.S. inflows in 2024, while first-time funds raised the least since 2013.
As AlphaWeek put it: “The emerging managers’ alpha premium is perhaps best demonstrated in the hedge fund world…[it] is particularly strong where an emerging hedge fund is led by a highly experienced and seasoned portfolio manager who previously worked out of a larger hedge fund.”
The allocator takeaway: The alpha is real, but most capital still flows to the largest firms. Finding emerging manager alpha requires access — and the conviction — to back smaller managers.
🔗 AlphaWeek 2025 “Alpha Premium”
🔗 NAIC 2025: “Finding Great Returns in a Changing Market”
🔗 Read the insights: Opportunities Investing With Early Lifecycle Hedge Funds