Preqin: U.S. Hedge Funds Manage 72% of Global Industry AUM

Oct 7 2016 | 11:05pm ET

The U.S. hedge fund industry has $2.2 trillion in assets managed by 3,170 hedge fund managers on behalf of 3,209 investors, according to new data from alternative investment industry observer Preqin. 

The tally, calculated as of June 30, underscores the dominant position of the U.S. within the global hedge fund community, accounting for some 72% of the approximately $3.1 trillion in global AUM and 62% of the 5,092 institutional hedge fund investors, Preqin said. 60% of global hedge fund managers, meanwhile, are located here, 37% of which are in New York.

Despite significant questions about recent performance and fees, Preqin’s data also shows that the U.S. hedge fund industry has grown strongly in recent years, increasing by $13 billion in the first half of 2016 (despite global outflows) and by $138 billion since the start of 2015. Moreover, in a recent survey of 270 hedge fund managers, Preqin discovered that notably more U.S.-based managers reported an increase (26%) in the proportion of their AUM allocated by investors than reported a decrease (4%), depicting a positive outlook for the US hedge fund industry.

Other key facts from Preqin’s Hedge Fund Industry report:

  • Fund Terms: Hedge funds located in Pennsylvania charge the lowest average performance fee (17.54%) of the top 10 most active US states, with funds based in Virginia charging the highest average fee of 20.00%. Massachusetts-based vehicles charge the lowest mean management fee, at 1.25%, while those located in Illinois have the highest fee of any state (1.58%), on par with New York-based funds (1.57%). 
  • Fund Performance: Hedge funds based in Texas have generated 3-year annualized performance of 8.96%, the highest of any of the top 10 US states, while Virginia-based vehicles have recorded returns of 8.13%. Hedge funds in Illinois, Connecticut and Massachusetts have fared less well over the same period, with annualized returns of 2.54%, 2.80% and 2.88% respectively. 
  • New York: Over one-third of U.S.-based fund managers are based in New York, and collectively these firms hold $1.1 trillion worth of assets – 36% of global industry AUM. Furthermore, New York represents nearly half (46%) of U.S.-based funds incepted since 2009. 
  • Investors by State: New York has the most active institutional investors (544) of any state in the US, while California are second in the list with 341 investors located in the state. The 77 New Jersey-based investors have an average current allocation to the hedge fund industry of 18.8%, by the far the highest of any state.

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.

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