London, 12 April 2012 - Assets in global hedge funds edged up
slightly during 2011, despite the strong headwinds in global markets and
the negative performance delivered on average from funds in the industry
last year, according to the latest research from HedgeFund Intelligence.
Assets in hedge funds of traditional types, which are mostly domiciled
offshore or structured as limited partnerships in the US, reached $2.059
trillion (including parallel onshore versions) at the end of 2011,
according to the latest research. That was a slight increase from $2.022
trillion at the end of 2010, though down a little from $2.158 trillion
at the mid-point of 2011.
If other hedge funds and absolute return funds in standalone European
UCITS onshore structures (with no parallel offshore versions) are added,
the latest total rises to $2.156 trillion – up from $2.099 trillion a
year before, but also down from mid-2011 when assets including UCITS had
reached $2.256 trillion.
These asset numbers indicate that the industry was continuing to receive
positive net inflows from investors despite the negative impact on
aggregate assets caused by performance losses.
The median performance of hedge funds globally was -2.01% in 2011,
according the HedgeFund Intelligence Composite – but, as in the last
negative year of 2008, the median again obscured a significant negative
skew in the distribution of returns, with the mean average of the
Composite weighing in quite a lot worse at -4.44%. For overall assets to
be slightly up again after such a difficult year provides powerful
testimony of the continuing faith of investors in hedge funds to deliver
strong risk-adjusted returns over the cycle – at least thus far.
The latest figures are encouraging, but still leave the industry a long
way from the peak level of assets which briefly spiked to $2.65 trillion
in 2007 during the period just before the global financial crisis. After
a dramatic fall during 2008 to just over $1.83 trillion, assets have
been edging up slightly every year since.
The big keep getting bigger
Meanwhile, the biggest players in the global hedge fund industry are
continuing to get bigger, accounting for a rising proportion of total
assets, according to the latest statistics on the Global Billion Dollar
Club – the elite group of firms that manage $1 billion or more in hedge
fund assets.
Collectively, the 340 current members of the Global Billion Dollar Club
now manage assets of just over $1.76 trillion, up again from around $1.7
trillion a year before, and now representing over 86% of the industry’s
total assets – up from 84% last year and 82% the year before.
The lion’s share of this increase is also concentrated in the
‘super-league’ of biggest firms that manage $5 billion or more. The
number of firms in that category has edged up from 93 to 99 in the past
year, and collectively they account for nearly $1.23 trillion – up from
$1.15 trillion a year before, now getting close to 60% of the industry’s
total assets.
The US market remains very much the top location for the world’s biggest
hedge fund firms. There are currently 230 firms that manage hedge fund
assets of $1 billion or more from the US. And New York is still the
biggest single centre of the industry, being home to no fewer than 139
of those firms, up from 128 a year before – though the proportion of
assets they account for slipped from 44.96% to 42.61%.
London remains in second place overall, and though its number of Club
members is down from 63 to 57, the share of assets of those firms is
slightly up, at 14.55% from 14.49%.
While firms based in Asia remain a relatively small portion of assets in
the industry overall, the number of local firms in the region reaching
the Billion Dollar Club continue to rise steadily. The number in Hong
Kong was up from 11 to 13 during the year and the number in Singapore
was up from seven to eight.
The total number of firms on the list now comes to 340 – a figure that
de-duplicates for a number of big groups such as BlackRock, Och-Ziff and
Brevan Howard that run $1 billion-plus funds from related companies in
more than one location. This is up a little from last year, when there
were 330 firms on the list.
