FoFs Manage Historically Low Percentage Of HF Assets

Jul 2 2012 | 12:55pm ET

Funds of hedge funds managed a historically low percentage of overall hedge fund assets in Q1 2012 according to research from eVestment|HFN.

Funds of funds accounted for only 36% of assets in hedge funds at the end of the first quarter, down from 38% at the same time last year and 49% three years ago. Funds of funds managed an estimated $909.8 billion as of March 2012, compared to total hedge fund AUM of an estimated at $2.554 trillion.

eVestment|HFN’s analysis shows that in the first three months of 2012, investors poured a net $31.4 billion into hedge funds while redeeming a net $7.3 billion from funds of funds.

Moreover, in the last quarter of 2011, investor redemptions from funds of funds outpaced redemptions from hedge funds. For this same time period, investors redeemed a net $22.7 billion from hedge funds while $34.7 billion was taken out of funds of funds.

“To an evolving landscape of hedge fund investors, it is increasingly difficult to showcase a clear, superior value provided by funds of funds, specifically using performance comparisons over every possible sub-classification, to other methods of accessing the industry.” said Peter Laurelli, vice president, research, eVestment Alliance, “Fund of funds’ core strength of single investment diversification to the hedge fund industry is moving towards a niche role as larger allocators to the industry become more comfortable investing directly, or working with consultants who may already be employed for traditional portfolios.”

The last time funds of funds experienced two consecutive quarters where outflows exceeded those of hedge funds and hedge fund inflows were positive while those of funds of funds were negative was Q2 and Q3 2009. A time when, according to eVestment|HFN, funds of funds were “facing difficult questions concerning the magnitude of losses during the financial crisis compared to the hedge fund industry, the surprising lack of liquidity the structures provided during times of distress and the apparent lack of due diligence that led some to investment in certain fraudulent funds or feeders.”

The eVestment database contains information on 2,552 unique funds of funds of which 34 are UCITS compliant.

 

 


In Depth

Part II: Roubini Talks Risk, Recovery And The Threat Of A Triple Dip Recession

Oct 21 2014 | 12:41pm ET

In the second half of our interview with Nouriel Roubini, FINalternatives editor...

Lifestyle

Balyasny Pays Over $6M For Lakefront House

Oct 22 2014 | 10:29am ET

A venture headed by hedge fund manager Dmitry Balyasny just paid $6.2 million for...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.