Mid-sized FoFs Saw AUM Rise In 2011

Feb 10 2012 | 12:21pm ET

Mid-sized fund of hedge funds managers—those with $1 billion to $5 billion under management—saw their AUM rise 10%, on average, in 2011, according to the latest numbers from Preqin research.

In total, 24% of fund of hedge funds managers reported an increase in AUM during the course of 2011, an increase of 7 percentage points on the proportion that enjoyed an increase between 2008 and 2009.

Big managers, on the other hand, those with over $10 billion, saw their assets under management decline 2.1% on average last year. Such large funds account for 5% of all managers, but 45% of industry assets.

Preqin says investors remains cautious in “the uncertain economic environment,” as evidenced by the decline in assets reported by 25% of managers.

Over the past 12 months, assets in funds of hedge funds have reached $945 billion, up from $910 billion at the beginning of 2011.

The proportion of fund of funds managers with less than $250 million in AUM continued to increase in 2011 and now stands at 38%.

Funds of hedge funds remain attractive to smaller investors looking to make their first commitments to the asset class.

Amy Bensted, head of hedge fund research at Preqin, said that “2011 was a difficult year for the hedge fund industry due to poor performance and investor caution. However, institutional investment in hedge funds is predicted to increase during 2012, meaning that fund of hedge funds managers need to react to investor demand if they are to be on the receiving end of a proportion of these assets.

“Investor demands for better fee structures, increased transparency and flexibility in their underlying investments is likely to lead to a surge in niche strategies and innovative products as managers look for ways to attract institutional capital ahead of single managers.

“If managers react to the changing demands of investors, the fund of hedge funds industry has the potential to grow further, and for AUM to reach the $1 trillion mark once more.


In Depth

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

 

From the current issue of

Business Insider has been reporting on the unusual trading activity of a mystery trader who placed a profitable short equity bet to the tune of $21 million on the Aug. 10 move in the CBOE Volatility Index (VIX).