While hard data on the hedge fund industry is hard to come by, it is commonly understood that 50% of single manager money comes from FOFs.
According to Hedgeworld, 30% of that 50% is gone, with significant implications for raising new capital. To name a few:
- consolidating positions
- knock-on redemptions
- legitimate concern over business viability
- limited time to entertain new manager ideas
For hedge funds reading this, be cognizant of the market dynamic before you approach a new investor. It is tough out there for everyone.
From Hedgeworld via InvestHedge
The industry’s largest funds of funds, managing more than $1 billion, now jointly control $744 billion in assets, according to industry publication InvestHedge.
In all, the hedge fund industry has $1.8 trillion under management, the magazine estimated. Some industry trackers have said that number is much lower—closer to $1 trillion or $1.5 trillion, after last year’s worst-ever returns.
The magazine found that Swiss powerhouse UBS Global Asset Management A&Q ranks as the biggest player with $34 billion in assets. Union Bancaire Privée is second with $33 billion, followed by HSBC Alternative Investment with $31.88 billion.
Outflows hit the hedge fund industry hard last year, when investors punished fund managers for their worst-ever returns—the average fund lost 19%—by pulling out roughly $155 billion. The trend was especially noticeable among funds of funds that lost an average 16.63%, InvestHedge said.