Big Funds Continue To Dominate HF Universe

Apr 30 2012 | 9:18am ET

Hedge funds managing $1 billion or more account for only 3.9% of reporting funds but about 60% of total single-manager assets, according to a study by hedge fund software provider PerTrac.

The study identified 322 single-manager hedge funds with AUM in excess of $1 billion in 2011, for a total of $1.08 trillion in AUM. Despite their dominance, there was only a 1.40% year-over-year increase in the assets of billion-dollar-plus funds in 2011 based on those that reported their results. (Some funds do not report to any database).

“The flight to size continues for hedge fund investors,” said Jed Alpert, managing director of global marketing at PerTrac. “Investors continue to view larger hedge funds as a better, safer bet even though industry data, including our own, indicates that smaller funds have generally outperformed larger ones.” 

The same bias appears in the fund of hedge funds world, where FoFs managing over $1 billion saw their assets increase almost 18% year-on-year in 2011 although the number of funds of funds fell 4.80% to 3,388.

The U.S. remains the center of the hedge fund universe, accounting for 42.3% of total (single-manager and fund-of-funds) assets, or $950 billion. The UK was second, accounting for assets worth $574 billion or 25.6% of the total.

PerTrac aggregates information from 11 global databases for its study. The firm says approximately 54% of hedge funds reported to only one database in 2011.

The study says there were 13,395 single-manager and funds of hedge funds worldwide managing assets worth $2.25 trillion in 2011. Of these, 10,007 were single-manager funds and they oversaw assets worth $1.80 trillion.


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