E X H I B I T 2 Alternative Manager Survival Rate
Source: Evestment (Alternative Investments and Hedge Funds), September 1, 2015.
18,049 of 28,174 (64%) traditional investment products still exist today. Exhibit 2 shows that a mere 8,204 of 27,205 (30%) of alternative investment products are active. “Alternative” references hedge funds, among others. Because 64% of traditional and 30% of alterna- tive are active, by implication, at least 36% of traditional investments and 70% of alternatives no longer exist. Invariably, managers stopped sending performance due to failure. The following exhibits provide a glimpse of
the survival/default rate of traditional and alternative fund managers. Arguably, the actual bankruptcy rate is much higher—the exhibits represent the most estab- lished firms and fund track records.
WHY ENTER THE MARKET?
Given the likelihood of failure, why do managers rush to get into this industry? If done correctly, fund
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W INTER 2015
T HE J OURNAL OF I NVESTING
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