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Global hedge fund industry buffeted by headwinds, says new report

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The global hedge fund industry is currently facing a number of headwinds, from fee pressure, increased redemptions and liquidations, to the decreasing new fund launches  as investors around the world look towards defensive strategies, according to a new report from 

But despite the tough times, the industry saw a double-digit annualised return in 2019 for the first time in the past six years.

The Global Hedge Fund Industry: Growth, Trends and Forecasts 2020-2025 report highlights that the United States currently accounts for three-quarters of assets under management globally in the sector. Despite hedge fund activity in other regions globally expanding alongside that of the United States, the country also accounts for 3,405 of the 5,523 institutional investors active in hedge funds and 3,319 of the 5,383 active hedge fund managers.

The report also takes a look at fees and how due to investor pressure, fund managers in some places have given up the traditional 2-20 fee structure for 0 per cent management fee and 30 per cent performance fee. 

Fund managers are also increasingly applying artificial intelligence & machine learning (AIML) techniques to improve operational efficiencies and boost returns. There are 150 active crypto hedge funds collectively managing USD1 billion AUM (excluding crypto index funds and crypto venture capital funds). Over 60 per cent of these funds have less than USD10 million in AUM with fewer than 10 per cent managing over USD50 million.

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