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11 Compelling Reasons To Use A Small Fund Manager

SMALLER AUM ASSET MANAGERS HISTORICALLY OUT-
PERFORM THEIR LARGER, OLDER COUNTERPARTS BY
SIGNIFICANT AMOUNTS

TALENT:

"THE MOST TALENTED MANAGERS SELF-SELECT TO START THEIR OWN FIRMS. MANY HIGHLY
TALENTED MANAGERS BUILD EXPERIENCE IN LARGER FIRMS BEFORE LAUNCHING THEIR OWN
FIRMS."*

We find this especially true in the hard asset, cash-flow world where diligent vigorous research and hands-on
management are critical. Where, to excel in an illiquid investment, the manager must constantly research to be
certain of his position and routinely able to negotiate daily for the good of the program, as opposed to just
clicking a buy or sell button to acquire or liquidate an investment.

A BETTER OPPORTUNITY SET:

“DUE TO THE SIZE OF THEIR AUM, LARGER FUNDS OFTEN HAVE LITTLE CHOICE BUT TO DILUTE
THEIR BEST IDEAS. EMERGING AND SMALLER FUNDS ARE BETTER ABLE TO TAKE ADVANTAGE
OF OPPORTUNITIES IN LESS EFFICIENT, SMALLER MARKETS AND SECTORS AND HAVE
GREATER FREEDOM TO INVEST IN LESS SCALABLE OPPORTUNITIES. EMERGING MANAGERS
ARE LESS CONSTRAINED BY LIQUIDITY AND CAN ACCESS A WIDER RANGE OF
OPPORTUNITIES…MOREOVER, ESTABLISHED MANAGERS MAY NOT BE ABLE TO DEPLOY A
LARGE PROPORTION OF THEIR ASSETS IN NICHE OPPORTUNITIES, WHEREAS A SMALL FUND IS
BETTER ABLE TO.”***

Smaller price tags make for greater opportunity for the smaller asset manager whose investment threshold is
$150,000 -vs- a large fund whose investment criteria starts at $10,000,000. In the public markets, "OFF THE
RUN AND LESS EFFICIENTLY PRICED STOCKS CAN HAVE A MEANINGFUL IMPACT ON
RETURNS."*

In the private markets, we continually make exceptional returns buying and aggregating real properties that
large companies and big fund managers don't have the time with which to bother. Once they are aggregated,
then they become a target for the large fund managers and companies.

It is not worth Devon's time to research an oil and gas lease that only makes $10,000 per month or for U-Haul
to acquire a $2 million self-storage property in Manvel, Texas, but put a $100 million deal in front of them and
their ears perk up. As smaller AUM managers, we take advantage of these inefficiencies routinely.

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