Despite the turbulence wreaked on alternative investments in the second half of 2007 by the US sub-prime meltdown, the credit crunch and equity market volatility, the global fund of hedge
Despite the turbulence wreaked on alternative investments in the second half of 2007 by the US sub-prime meltdown, the credit crunch and equity market volatility, the global fund of hedge funds industry grew at an increasing pace last year, according to a survey by InvestHedge, published by data and research provider HedgeFund Intelligence.
The survey also found that funds of hedge funds posted an average performance of 8.68 per cent for the year, exactly the same average performance as in 2006.
Overall the sector’s assets under management grew by USD264bn in 2007, equivalent to nearly 32 per cent, following growth of USD183bn or 29 per cent in 2006 and USD72bn in 2005. The largest funds of funds, those with more than USD1bn in assets under management, now account for a combined USD1.1trn in assets, InvestHedge says.
‘Despite the credit crunch and equity market volatility, performance for the full year was identical to 2006 and asset growth still showed no signs of slowing down – in fact quite the reverse,’ says InvestHedge editor Niki Natarajan. ‘Institutional investors are still flowing into the industry, making up an average of 78 per cent of funds of funds’ total assets.’
A total of 151 managers of funds of hedge funds now have more than USD1bn in assets, up from 142 in 2006. The InvestHedge database includes more than 2,700 fund of funds products run by 586 management companies.
The alternative and quantitative investments of UBS Global Asset Management remains the largest fund of hedge fund manager surveyed, with assets under management rising 33 per cent to USD57.5bn at the end of 2007. The fund of funds assets of UBS Wealth Management USA brings the total for the UBS group to more than USD60bn.
The 31 funds of hedge fund managers with more than USD10bn each under management saw their assets grow by an average of 33 per cent last year to a combined total of USD682bn. In 2006, only 21 fund of hedge funds managers had more than USD10bn in assets.
Union Bancaire Privée, which manages more than USD53bn in assets, is the world’s second largest fund of hedge funds manager, followed by Man Group with USD52bn, including the assets managed by subsidiaries such as Glenwood Capital Investments and RMF.
According to InvestHedge, other leading fund of hedge funds managers include HSBC Alternative Investments (USD41.6bn), Permal Investment Management (USD38.1bn), GAM Multi-Manager (USD33.1bn), Blackstone Alternative Asset Management (USD27.9bn), Crédit Agricole Asset Management (USD26.38bn), Société Générale’s Lyxor Asset Management (USD25.9bn) and Grosvenor Capital Management (USD25.4bn).
The proportion of fund of hedge funds assets from institutional investors is now at 78 per cent. A poll of firms with more than USD1bn under management found that 43 per cent drew more than 90 per cent of their assets from institutional investors, up from 36 per cent the previous year.