It’s called the Golden Rectangle. And if you’re reading this, there’s a decent chance you work in it.

Bank of America Corp.’s prime-brokerage consultants regularly advise new funds they work with to launch out of Manhattan—particularly in a swath of Midtown between Third Avenue and Seventh Avenue, and from 42nd Street to 62nd Street.

“That’s where the golden rectangle of investors is,” says Chris Throop, the bank’s head of business consulting. He estimated another location could mean 10% to 20% fewer investor meetings.

Indeed, despite all that Connecticut’s done to doll herself up for the hedge fund industry—cooing in its ears, telling it how much it loves it, taking it out to dinner, getting a Shake Shack—the Nutmeg State may have an intractable problem: It seems that institutional investors, the girls hedge funds are really hopelessly in love with, have neither the time nor inclination to subject themselves to a ride on MetroNorth or Interstate 95.

“There were enough roadblocks to establishing a new fund that I didn’t want to create another” by being outside Manhattan, Mr. Hentemann says. “I can capture that investor that may not have made that trip up to Greenwich, but they had an opening in their schedule an hour before they had to go to JFK to go back to Europe.”

Mr. Hentemann said the New York location has helped his structured-credit firm, 400 Capital Management, land more meetings with investors. Some of those visits, he said, paved the way for those investors to put their money with his firm.

It does seem weird to talk about a “hedge fund migration” to a place that is already, by some distance, the largest hedge fund center in the world. But these numbers, at least, don’t lie.

Of the new firms starting out in Manhattan, Greenwich or Stamford, about 86% picked the Big Apple, on average, from 2003 to 2008, according to eVestment, which tracks data on about 70% of U.S. hedge-fund firms. In 2009 and 2010, Manhattan was home to an average of 92% of the fund launches. Data for 2011 suggest the trend has continued.

Hedge Funds’ Manhattan Migration [WSJ]

Comments (12)

  1. Posted by Im_a_Dude | January 15, 2013 at 4:20 PM

    Golden rectangle? any connection to a golden shower?

    UBS MD

  2. Posted by FKApmco | January 15, 2013 at 4:50 PM

    I'm with you Dude. Golden Rectangle immediately made me think of heroin and anal. Maybe our new catch-phrase can be "Hey, let's go and get shazarred in the Golden Rectangle. "

  3. Posted by Word Quant | January 15, 2013 at 4:57 PM

    Reportedly firms that opt to open outside of the city risk Shazaring their chances with busy investors.

  4. Posted by Guest | January 15, 2013 at 9:48 PM

    Fuck me sideways this made my head hurt.

    - guy who thinks if being in Midtown is the difference between getting raised or not, you're probably not ready to be on your own

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  11. Posted by photocopier | June 18, 2013 at 1:51 PM

    It does seem weird to talk about a “hedge fund migration” to a place that is already, by some distance, the largest hedge fund center in the world.

  12. Posted by Ahli Kompi | June 18, 2013 at 5:26 PM

    you could list what the stuff was, if you had a big enough piece of paper, what this ??