The world’s biggest funds of hedge funds took a beating over the last year-and-a-half, with more than one-third of their assets evaporating.
The top 25 fund of funds managers collectively saw their assets fall 37% to $319 billion between June 30, 2008, and Dec. 31 of last year, Pensions & Investments reports. Just three of the top 25 firms saw any asset growth at all, and some saw more than half of their assets disappear as investors increasingly shy away from funds of funds and their added layer of fees.
The hardest-hit managers included Union Bancaire Privée and the Man Group, both of whom had exposure to the Bernard Madoff Ponzi scheme. The former saw its assets plummet two-thirds to $18.8 billion, while the latter, which last year restructured its fund of funds businesses, lost 62% of its assets and now manages $17.1 billion. Bank of New York Mellon lost 55% of its fund of funds assets and now counts just $8.1 billion worth.
On the other hand, JPMorgan Asset Management—part of the world’s largest hedge fund manager—saw its funds of funds grow by 11% to $11.9 billion. Rock Creek Group added 10% to $5.5 billion, and K2 Advisors increased its funds of funds by 8% to $8 billion.
Institutional investors remain the most ardent adherents to funds of funds. Of the top 25 firms, those who institutional investors account for three-quarters or more of their assets saw those assets decline by an average of just 23%. Those whose institutional investors account for one-quarter or less suffered an average decline of 41%. All told, institutional assets managed by the top 25 fell 45% during the period to $179 billion.