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Funds of Hedge Funds Industry Shrinks by 30%


Date: Tuesday, March 10, 2009
Author: InvestHedge

Funds of hedge funds

industry shrinks by 30%

 

Says InvestHedge Billion Dollar Club survey

 

 

•   The funds of funds industry, which until June had more than $1 trillion in assets, lost more than $300 billion in assets in 2008

•   Firms with more than $1 billion in assets under management reached combined amount of $744 billion

•   137 funds of hedge fund management firms have $1 billion under management including 14 new additions in 2008

•   27 funds of funds group either closed their businesses or had their assets fall below the $1 billion asset level in 2008

•   UBS ends the year as largest funds of funds group in the world

 

 

London, 10 March 2009 - The funds of hedge funds industry shrank by nearly 30% in 2008. Volatile markets, zero liquidity, and year-end average returns of -16.63% led to the asset outflows for the global funds of funds industry, according to the latest survey of the InvestHedge Billion Dollar Club.

 

The largest funds of funds – those with more than $1 billion in assets under management – now control a combined amount of $744 billion in assets, according to the 2008 asset flow survey carried out by InvestHedge, the leading publication about investors in hedge funds.

 

“The industry has taken a serious beating but it is not an industry that is on the brink of extinction. The multi-manager approach and professional selection of hedge funds is still very much essential for the creation of a healthy hedge fund portfolio,” says Niki Natarajan, editor of InvestHedge. “What has happened is that the barriers to entry have finally gone up and only those that are serious representatives of the funds of funds industry will win the institutional money.”

 

“This clear-out was necessary as there were too many sloppy practices in the industry. Everyone, large or small, good or bad, will be going back to the drawing board to make sure that their business can stand the highest level of scrutiny.”

 

There are now 137 funds of hedge fund management companies in the InvestHedge Billion Dollar Club and if the assets of the smaller 420 or so funds of funds management companies are also included, this universe still manages roughly half the assets of the hedge fund industry (which currently measures about $1.8 trillion in all according to the latest HedgeFund Intelligence data). Some 27 groups fell out of the rankings after shutting their businesses or the assets falling below the $1 billion level.

 

UBS Global Asset Management A&Q with total assets of $34 billion regained the top slot in the rankings having lost in the mid-year survey to Union Bancaire Privée, which now has $33 billion in total assets. If the assets of UBS Wealth Management USA are added in, UBS has a total of $36.8 billion, making the largest hedge fund of fund management group in the world.

 

Man Group, which includes RMF Investment Management, Glenwood Capital Investments and Man Global Strategies, now has a total of $26.6 billion, taking its global position as a group to 4th in the rankings after HSBC, which has $31.9 billion.

 

 

Top 10 largest Funds of Funds

  31 December 2008 

 

 Assets $bn

UBS Global Asset Management A&Q 

34.00

Union Bancaire Privée

33.00

HSBC Alternative Investments

31.88

Permal Investment Management

24.40

Blackstone Alternative Asset Management

23.65

Goldman Sachs Asset Management

23.50

Credit Suisse

21.90

Grosvenor Capital Management

20.50

RMF

19.30

GAM Multi-Manager

18.40

Total

250.53

Source: InvestHedge

 

 

 

-Ends-

 

 

Notes:

 

About HedgeFund Intelligence and InvestHedge

 

HedgeFund Intelligence is the biggest provider of hedge fund news and data in the world, with the largest and most knowledgeable editorial and research teams of any hedge fund information provider. We supply data on more than 11,000 funds and comprehensive news and insight from across the globe. Through four regional brands – Absolute Return, EuroHedge, AsiaHedge, AfricaHedge – and InvestHedge, which focuses on investors in hedge funds – we provide news and data to the global hedge fund industry.

 

 

For more information, please contact:

 

Niki Natarajan, Editor, InvestHedge

+ 44 (0) 207 779 7360
nnatarajan@hedgefundintelligence.com

 

Neil Wilson, Editorial Director, HedgeFund Intelligence

+44 (0) 20 7779 7359

nwilson@hedgefundintelligence.com

 

US media:

Stefan Prelog, Walek & Associates

+1 212 590-0523

sprelog@walek.com

 

Rest of world media:

Paul Farrow, Merlin PR

+44 (0) 20 7653 6620

pfarrow@merlinpr.com