Blackstone’s hedge fund AUM dips despite performance gains, as group-wide assets rise 8 per cent

Blackstone office in Manhattan

Blackstone – the world’s largest alternative investment manager – has seen its group-wide assets increase by 8 per cent, though its hedge fund capital fell slightly last year, despite positive performance amid “significantly less volatility than the broader markets”.

The group, which runs a range of hedge fund, private equity, credit, real estate, and alternative products, saw its total assets under management swell to USD618.6 billion in 2020 – an 8 per cent year-on-year increase from 2019’s total of USD571.1 billion, with Q4 2020 inflows numbering USD32.3 billion.

The group had deployed some USD293.6 billion of investable capital at quarter-end, a rise of some 18 per cent from the previous year, while its total dry powder available for investment stood at USD147.7 billion. 2020’s distributable earnings reached USD1.46 billion, up from USD914 million in 2019.

In its Q4 and full-year results statement on Wednesday, Blackstone said its Hedge Fund Solutions business attracted some USD10.4 billion of new investors inflows over the course of 2020 – including USD2.12 billion of capital during Q4 – which brought the group’s total hedge fund assets to USD79.4 billion last year.

However, its total hedge fund AUM is down slightly from 2019’s year-end total of USD80.7 billion.

The Hedge Fund Solutions unit – named BAAM – offers clients access to a wide range of alternative investment strategies through portfolios of hedge funds, registered liquid funds, direct investing, manager seeding, and general partner ownership.

Its hedge funds’ invested performance grew from USD43.8 billion at the end of 2019 to more than USD47 billion in 2020, reaching gross returns of 5.5 per cent (4.6 per cent net) over the past 12 months, with what Blackstone described as “significantly less volatility than the broader markets.”

The group’s hedge fund business now has some USD4.2 billion of dry powder to deploy.

Blackstone chairman and CEO Stephen A Schwarzman said the group had achieved “record results” in the fourth quarter.

“Despite the highly challenged economic backdrop in 2020, we continued to deliver differentiated investment performance for our limited partners, leading to nearly USD100 billion of capital inflows – the fourth consecutive year at this level or better,” Schwarzman said.

“Looking forward, we have an extraordinary range of growth initiatives across every area of the firm, with an increasing focus on perpetual capital. The firm ended 2020 in a position of strength and we have great confidence in the path ahead.”