Funds of Hedge Funds Growth Slows

Sep 17 2008 | 11:54am ET

Funds of hedge funds showed the first signs of an asset slowdown in the first half of 2008, but still posted a net inflow of some $50 billion despite volatile markets and lackluster returns.

According to the latest survey of the InvestHedge Billion Dollar Club, funds of funds had average loss of 1.25% for the first half of 2008, and grew their overall assets by only about 4.5%, compared to 17% during the first half of last year.
The largest funds of hedge funds—those with more than $1 billion in assets under management—now control a combined $1.16 trillion in assets. Union Bancaire Privée took the top slot from UBS Global Asset Management A&Q as the largest single allocator by assets under management with $56.87 billion.
But UBS is still the largest overall allocator in the world with some $60 billion overall, if the assets of UBS Wealth Management USA are included.
Man Group, with three major groups that allocate to hedge funds—RMF, Glenwood Capital Investments and Man Global Strategies—has a total of $54 billion in funds of funds assets.
“Overall the industry is still growing and this is still not likely to stop,” said Niki Natarajan, editor of InvestHedge. “What is clear after the performance for the first half of this year is that more care will need to be taken in selecting funds of funds as the universe is definitely not uniform in terms of growth and performance.”
There are 160 funds of hedge fund management companies in the InvestHedge Billion Dollar Club, and there are now six firms with $30 billion or more each, growing an average clip of 4.51%.

Top 10 Funds of Funds

Allocator Assets
Union Bancaire Privée $56.87
UBS Global Asset Management A&Q $56.80
HSBC Alternative Investments $46.60
Permal Investment Management $39.30
GAM Multi-Manager $31.89
Blackstone Alternative Asset Management $31.70
Man Group RMF $29.40
Grosvenor Capital Management $27.40
Credit Suisse $25.04
Crédit Agricole Asset Management Alt. Inv. $25.97

through June 30

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