Margolis Advisory Group, Inc. . Investment Management . Consulting . Sales

Trials and Tribulations of Emerging Managers

August 4th, 2009

It’s a tough time right now for any manager. Although there is far more optimism in the air than there was a few months ago, the investment community is still cautious. Many managers continue to have trouble gaining any business momentum. I have spoken to quite a few emerging managers lately who express frustration. These firms are either recent start-ups or just small managers who by virtue of their size fall into the emerging manager category. A number of these firms are questioning whether they can survive in an environment which seems to place a premium on stability. How will they attract assets if their prospects are afraid to place assets with a firm that may not survive?

If misery loves company, they should know that they have it with the large managers. Many of these firms have fallen out of favor, rightly or wrongly, due to their affiliation with other financial services businesses under scrutiny from the government and the public. Despite their size, they are not necessarily viewed as more stable than the small managers. Small managers, many feel, have the advantage of focus and dedication to their specific investment approach. They are also often employee owned which aligns their interests with their clients’ interests.

So, emerging managers should stay the course if they are passionate about their investment approach and their business. The investment management business tends to require considerable staying power before firms see the rewards of their efforts. But if they deliver strong investment results, dedicate themselves to their clients, practice persistence, and deeply believe in themselves, they are likely to succeed, perhaps dramatically, over time.

Filed under: General

Tags: emerging, managers