Many investors dream of getting in on the ground floor with new companies before they get too big, which is one reason why many pile in when a hot start-up does an IPO. But why don’t they feel the same way about investment managers?
Sanjoy Ghosh, chief investment officer of Covestor, in a recent article for MarketWatch writes about why emerging portfolio managers can beat those with more experience, citing new research showing they have certain overlooked advantages.
Institutional investors and university endowments are “beginning to recognize that emerging managers can be a high-growth part of an overall investment solution,” Ghosh points out. “They’re keen to identify rising stars and discover hidden talent. They recognize that emerging managers can generate significant upside due, in part, to their smaller size.”
He also discusses how an investment marketplace is one way to identify and invest with emerging managers.
“If you do your homework on these emerging managers, you can be positioned well to find a star manager while they’re still in their growth phase, when their returns tend to be strongest,” Ghosh says.
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Disclaimer: The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. Past performance is no guarantee of future results.