Preqin: Billion Dollar Club Expands By Eight In Past Year, AUM By 6%

May 26 2017 | 8:37pm ET

The exclusive club of hedge fund managers with at least $1 billion in assets under management continues to expand despite well-publicized travails in the industry, according to new research from Preqin. 

The so-called Billion Dollar Club has grown as new members join and total combined allocations to the hedge fund asset class rise, Preqin said in a statement. Membership in the group has seen a net increase of eight in the 12 months to June 2017 and now stands at 242, while capital invested in hedge funds by these institutions has grown by 6% over the past year to $805 billion. 

All told, the Billion Dollar Club collectively accounts for almost a quarter of the total institutional capital allocated to hedge funds, Preqin added.

Other key facts from Preqin’s Billion Dollar Club Hedge Fund Report:

  • Over the course of the past year, 36 institutional investors have entered the Billion Dollar Club while 28 have
exited
  • Public pension funds account for the largest proportion (28%) of capital allocated by the Billion Dollar 
Club, and represent the highest number of new entrants to the club (11) over the past 12 months. 

  • North America accounts for the greatest proportion (61%) of capital invested in hedge funds by the Billion 
Dollar Club, while Europe-based investors account for just over a fifth (21%), and Asia accounts for 9%. 

  • Members of the Billion Dollar Club give greater weight to hedge funds within their portfolios. They typically 
allocate 16% of their total AUM to hedge funds, compared to 14.5% among all other investors. 

  • However, this represents a decrease over the past 12 months: the average allocation to hedge funds of a 
Billion Dollar Club member was 16.8% as of June 2016. 

  • There has been a net reduction in allocations in the past 12 months: 37% of Billion Dollar Club 
members have decreased their allocations in the past year, while 28% increased them. 

“Investor outflows dominated the narrative surrounding the hedge fund asset class in 2016,” said Amy Bensted, Preqin’s head of hedge fund products, in the statement. “However, despite some high-profile redemptions and withdrawals in recent years, the group of the largest hedge fund investors continues to grow in both number and influence. 

“The Billion Dollar Club...has great influence over the industry; one in every four dollars in hedge funds today comes from this group of 242 institutions," Benstead added. "These investors are increasingly using their collective might to lobby hedge fund managers to improve the alignment of interests between the two parties. At a time when fund terms and conditions are in the spotlight, this will ultimately improve alignment for all institutional investors in the asset class.” 


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 47,000 professionals in 90 nations use the company’s products.


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