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Hedge fund study shows slight increase in assets but fewer funds

Hedge fund study shows slight increase in assets but fewer funds

The number of hedge funds and funds of funds fell by approximately 8.6 per cent in 2009 but total industry assets rose by 5.5 per cent, according to PerTrac Financial Solutions’ hedge fund database study.

The study, which is based on a survey of ten of the world's leading databases, shows that in contrast to the modest asset increase, the number of actively reporting single managers dropped by 9.4 per cent and the number of reporting funds of funds by 7.1 per cent.

PerTrac says it is important to note that non-reporting funds did not necessarily close their doors. Funds stop reporting to databases for a variety of reasons, among them poor performance, strong performance, personnel changes, hard closes, soft closes and business failure.

"Our study paints a picture of a hedge fund industry still struggling to regain its footing after the market meltdown of 2008," says Meredith Jones (pictured), managing director of PerTrac. "Hedge fund assets reported to the databases rose by 5.5 per cent over the year, to USD1.41trn, still well short of their high-water mark at the end of 2007 when they topped USD2trn. However, the assets flowing through funds of funds into the industry dropped sharply, by 22.7 per cent, from year-end 2008 to year-end 2009.”

Single manager funds in the databases account for approximately USD1.41trn under management. Nearly 200 funds held assets in excess of USD1bn. Meanwhile, about half of single manager funds with reported fund sizes manage less than USD25m.

There were approximately 7,050 different FOFs that appeared in the study, of which 6,300 had reported performance numbers in 2009. Of those FOFs which had reported returns last year, about ten per cent were domiciled in the US and 90 per cent outside the US.

There appears to be about USD580bn invested into hedge funds through FOFs. This represents a 22.7 per cent decline in assets managed through FOF vehicles from the year before. Like single manager funds, a large percentage of FOFs are relatively small, with approximately half of those reporting fund sizes managing less than USD25m.

Among the 21,700 distinct investments identified in the study, approximately 2,450 of them can be categorised as commodity trading adviser/managed futures investment vehicles. Reported assets among these investments totalled approximately USD300bn.

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