London, 1 October 2012 - Despite a
period of lacklustre returns, assets in global hedge funds
continued to edge up during the first half of 2012,
according to the latest research from HedgeFund
Assets in hedge funds of traditional types, which are
mostly domiciled offshore or structured as limited
partnerships in the US, managed total combined assets of
$2.147 trillion (including where they have parallel onshore
versions) at the mid-point of 2012, up about 4% from the
figure of $2.059 trillion at the end of 2011. If other
hedge funds in standalone onshore European UCITS structures
(with no parallel offshore versions) are added, the total
reaches $2.245 trillion, up from $2.156 trillion at the end
of last year.
The latest statistics on assets follow a period in which
hedge fund returns have returned to positive territory -
after a period of losses in 2011. However, they have
generally lagged the performance of major equity indices
including the S&P500 and MSCI World for most of the
year so far.
Despite lacklustre returns, the industry is continuing its
steady if slow recovery from the savage drop in size that
occurred during the second half of 2008, when a flood of
redemptions accompanied by substantial negative returns
during the financial crisis saw assets drop by nearly a
third from a peak of $2.65 trillion at the end of 2007 to
only $1.83 trillion a year later.
In 2009 and 2010 the recovery was led largely by
performance, with returns rebounding strongly after the
trauma of 2008. And in 2011, assets kept rising - as
investors continued to allocate more money to hedge funds
despite the fact that average performance went negative
again for the second year in the last four. Unlike 2008,
last year's disappointing returns were not accompanied by a
further wave of redemptions - a pattern that seems to have
been continuing through the first half of 2012.
The industry continues to be dominated by funds managed in
the Americas - and it was the American funds that have
accounted for the lion's share of the increase in assets so
far this year, with the total for hedge funds in the US up
again from $1.470 trillion to over $1.542 trillion during
the first half of the year.
In Europe, by contrast, where the industry's outlook has
been blighted to some extent by the ongoing Eurozone debt
crisis, assets were barely changed at $423 billion; and in
Asia, assets were up only slightly to $144 billion.
Commenting on the latest figures, HedgeFund Intelligence
managing editor Neil Wilson said: "Hedge funds have sold
themselves very successfully on the basis that they can
outperform over the cycle, and do so with lesser volatility
than equities. But their ability to achieve those aims will
be under more scrutiny than ever over the next year or so."
He added: "Hedge funds have of course underperformed before
during strong bull market periods in equities, and - for
the time being at least - most investors seem to remain
firmly committed to their hedge fund investments."
Billion Dollar Club grows
Collectively, the number of firms that belong to the
Billion Dollar Club (those firms which manage hedge fund
assets of $1 billion or more) expanded significantly in the
first half of 2012 - from 340 at the beginning of the year
to 364 at the mid-year point, and with more firms in the
Club it was not surprising that their total assets managed
was also rising, from $1.763 trillion to $1.848 trillion.
That continues a trend going back over several years
whereby the bigger players have gradually become more
dominant, now accounting for around 86% of the industry's
Most of the new entrants to the Club this year have been in
the US, where the number of members in New York for
instance has jumped from 139 to 153, with collective assets
rising from $751 billion to just over $800 billion.
The number of Club members headquartered in London slipped
by one to 56, though collective assets were not much
changed at $255 billion. A number of the bigger groups in
London continued to grow, and there are now no fewer than
seven of the top ten firms that have significant operations
After growing steadily in recent years, Asia's
representation in the Club slipped back in the first half,
with the number of members in Hong Kong down from 13 to 11
and in Singapore down from 8 to 7. But the number in Brazil
rose from 3 to 4 (including three in Rio de Janeiro and one
in Sao Paulo) now with collective assets of over $20
Full details on the breakdown of industry assets, including
all the numbers on the Global Billion Dollar Club (all the
364 firms which run current hedge fund assets of $1 billion
or more) are published in the Autumn edition of the
HedgeFund Intelligence Global Review.
The figures shown here are for single-manager hedge
funds only. They do not include or double-count money
allocated to hedge funds via funds of funds. Assets in
funds of hedge funds are tracked separately by
About HedgeFund Intelligence:
HedgeFund Intelligence is the leading provider of news,
analysis and performance data on the global hedge fund
industry. The company provides dedicated information on
US, European, Asian and African single-manager hedge
funds as well as on hedge fund investors worldwide.
For more information, please contact:
Del Jones / Toby Bates, Merlin PR