Hedge funds of funds hit $1 trillion in assets says InvestHedge Billion $ Club survey at end-2007

Date: Monday, February 11, 2008
Author: Hedge Fund Intelligence

The global funds of hedge funds industry grew at an increasing pace in 2007, as more than $264 billion was added to assets managed by the leading firms during 2007, according to the latest survey of the InvestHedge Billion Dollar Club.

Overall the industry’s assets under management grew by nearly 32% last year, up from the growth rate of 29% in 2006 – when assets increased by $183 billion – though still below the 44% record growth rate of 2004.

The growth in assets was achieved as funds posted an average performance of 8.68% for the full year, exactly the same average performance as recorded in 2006. The performance was impressive given the host of different challenges the industry faced, particularly the volatile markets and the ‘credit crunch’.

The largest funds of funds – those with more than $1 billion each in assets under management – now control a combined amount of $1.1 trillion, according to the end-2007 asset survey carried out by InvestHedge, the leading publication that tracks investors in hedge funds.

“This was a year to be reckoned with. Despite all the tests of the credit crunch and equity market volatility, the performance for the full year was identical to 2006 and asset growth still showed no signs of slowing down. In fact quite the reverse,” says Niki Natarajan, editor of InvestHedge. “Institutional investors are still flowing into the industry, now making up an average of 78% of fund of funds’ total assets.”

There are now 151 funds of hedge fund management companies in the InvestHedge Billion Dollar Club – although the total industry is significantly larger. (There are now more than 2,700 funds of funds products run by a total of 586 management companies, according to the InvestHedge Database).

UBS Global Asset Management A&Q is still the largest firm in the Billion Dollar Club and grew at a rate of nearly 33% to reach $57.5 billion under management at the end of 2007. Including the assets of UBS Wealth Management USA, the UBS group is once again the largest fund of funds operator in the world, managing more than $60 billion in total.

There are now 31 funds of hedge fund firms that run more than $10 billion in assets and this group, which grew by 33%, now collectively manages some $682 billion. In 2006, there were only 21 firms above $10 billion.

Union Bancaire Privée, which manages more than $53 billion in assets, is the second largest single fund of hedge funds firm in the world. And Man Group is now the third largest fund of funds operator in the world with $52 billion – including the assets managed by its various units, including Glenwood Capital Investments and RMF.

The percentage of assets from institutional investors in the average fund of funds Company is now at 78%. A straw poll of the InvestHedge Billion Dollar Club showed that 43% of the firms have more than 90% of the assets from institutional investors, up from 36% in 2006…

For more information contact: Niki Natarajan, InvestHedge Editor, Tel: + 44 (0) 207 779 7360, nnatarajan@hedgefundintelligence.com - Neil Wilson, Editorial Director, HedgeFund Intelligence Tel: +44 (0) 20 7901 1905, nwilson@hedgefundintelligence.com.