Entrepreneurship Leads to Alpha
Progress believes, and numerous research studies have shown, that investment managers with less than $2 billion in assets under management possess a distinct performance advantage, especially in asset classes where the ability to take calculated risks and move swiftly is vital to success.
What is the source of this emerging manager performance advantage? Early stage investment companies with less than $2 billion under management have more to gain and less to lose. They tend to be open to innovation, efficient users of technology, able to execute swiftly, free from bureaucracy and driven by ownership incentives.
We further believe that the potential to outperform, at certain stages of firm development, is best realized through risk-controlled, diversified, multi-manager portfolios. Such portfolios diversify the investment and business risk associated with new firms, giving investors the benefit of thoughtful manager selection, disciplined portfolio construction and systematic manager monitoring and assistance.