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 Intelligence.
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
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
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
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
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 in London.
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 billion.
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 InvestHedge.
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