There was a 1.3 per cent drop in the number of hedge funds and funds of hedge funds included in major hedge fund databases over 2008, according to a study by PerTrac Financial Solutions
There was a 1.3 per cent drop in the number of hedge funds and funds of hedge funds included in major hedge fund databases over 2008, according to a study by PerTrac Financial Solutions.
The study found a total of approximately 22,350 distinct investment vehicles among the databases at the end of 2008.
‘Although the hedge fund industry remains larger than many published estimates have asserted, it was definitely adversely impacted by 2008’s difficult market conditions,’ says Meredith Jones, managing director of PerTrac (pictured). ‘Our research reveals 1.3 per cent fewer funds among the 11 databases in our study versus one year earlier, the first-ever year-over-year decrease in funds we’ve seen since we began producing our annual study in 2003.’
The number of both single-manager hedge funds and funds of funds fell last year, dropping by 0.5 per cent and three per cent, respectively.
The decline in total fund managers combined with poor average performance and high redemption rates took its toll on hedge fund assets under management as well. While the total number of funds showed a small decrease, reported assets among single manager hedge funds declined 36.1 per cent between year-end 2007 and 2008, down to USD1.33trn.
The study, released annually since 2003, is a widely-followed indicator of the size and composition of the hedge fund industry. The 2008 study was conducted using data from eleven major hedge fund databases, combined and analyzed with the PerTrac Analytical Platform, the world’s leading investment analysis and asset allocation software application.
The study found a total of over 56,000 investment records across all databases, including both single manager hedge funds and funds of hedge funds.
Approximately 15,150 single manager hedge funds were identified, and approximately 7,200 FOFs were identified. This compares with 15,250 single manager hedge funds and 7,400 FOFs identified in the 2007 study.
Of the 15,150 single manager hedge funds, approximately 13,450 reported performance in 2008. Of those, approximately 28 per cent were US domiciled funds and 72 per cent were non-US domiciled.
Approximately 6,750 FOFs reported performance in 2008. Of those, approximately 13 per cent were US domiciled while 87 per cent were non-US domiciled.
The number of US domiciled funds dropped by 15.8 per cent in 2008, while the number of offshore domiciled funds grew by approximately 5.1 per cent.
Approximately 9,200 (61 per cent) of the single manager funds appear to be ‘clones’ of another fund, meaning that they trade pari passu, either as offshore funds, super-accredited funds or separate share classes (usually differing in currency denomination) of a single fund strategy.
Single manager funds in the databases account for approximately USD 1.33trn under management. Over 200 funds held assets in excess of USD1bn. Meanwhile, half of single manager funds manage less than USD25m.
Among the 22,350 distinct investments identified in the study, approximately 2,000 of them appear to be managed by commodity trading advisers. Reported assets among these investments totalled approximately USD230bn. Those figures represent a 2.7 per cent drop in the number of CTA funds and a 29 per cent drop in assets from a year earlier.
The numbers of new hedge fund and fund of funds launches continued their downward trend in 2007. About 5,200 single-manager hedge funds began trading in 2007, down 25 per cent from 2006, when approximately 6,950 new single-manager funds launched. That figure represents a 15 per cent decline from 2005.
Launches of new FOFs fell for the third consecutive year in 2007. Just under 2,400 new FOFs started that year, a decrease of 23 per cent from 2006, when 3,100 new FOFs launched. The 2006 figure marked a 13 per cent decrease from 2005.
