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‘USD1 billion club’ managers hold 88 per cent of all hedge fund capital

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The ‘USD1 billion Club’ of firms holding at least USD1 billion in assets has grown by 98 firms over the past year, and now accounts for 12 per cent of all hedge fund managers, according to Preqin’s latest hedge fund industry research.

The proportion of total industry assets held by these funds has declined from 92 per cent in 2015 to 88 per cent in 2016; USD1 billion Club firms now manage USD2.75 trillion in total AUM, down from USD2.78 trillion at the end of Q1 2015. However, in the same period total hedge fund industry assets have fallen from USD3.16 trillion to USD3.13 trillion, following challenging market conditions, the conversion of some large funds to family offices, and high-profile redemptions from some investors. 
Other USD1 billion Hedge Fund Club Facts: 

Since 2015, the aggregate AUM of managers in the USD10-19.9 billion bracket has surpassed managers controlling over USD20 billion in assets, with these firms holding USD675 billion and USD672 billion, respectively. Firms with USD1-4.9 billion in AUM manage 27 per cent of total industry assets, the largest proportion of any fund size. 

The majority (54 per cent) of hedge funds with USD1 billion or more in assets saw net inflows through Q1 2016, the highest proportion of any fund size. Nine percent of funds with over USD1 billion in AUM saw no change in assets while 37 per cent saw losses through the quarter. 

Multi-strategy funds are most common among the largest firms of the USD1 billion Club; 20 per cent of managers with over USD20 billion in AUM employ multiple strategies compared to 10 per cent holding USD1-4.9 billion. The largest proportion of assets is invested in equity strategies and the smallest in niche strategies and CTAs. 

North America is home to 479 USD1 billion Club managers, holding just over USD2 trillion in assets while Europe contains 129 members managing USD605 billion. Asia-Pacific and Rest of World make up the remainder of the Club, with 60 firms in these regions controlling an aggregate USD123 billion. 

Five firms established in 2015 have already amassed assets of USD1 billion or more, three of which are spinoffs from existing hedge fund managers. Systematica Investments launched out of BlueCrest Capital in perhaps the most notable spin-off, taking BlueCrest out of the USD20 billion or more bracket before its conversion to a family office. 

“With the number of managers exceeding USD1 billion in AUM increasing, the USD1 billion Club continues to control a substantial proportion of the hedge fund industry’s assets,” says Amy Bensted, Head of Hedge Fund Products at Preqin. “Newly established firms that can demonstrate a strong pedigree at other USD1 billion Club firms have entered the Club by obtaining large capital commitments from day one, while more established firms have gained access through asset growth. 

“Although the assets managed by the USD1 billion Club have declined since Preqin’s last update a year ago, the largest hedge funds saw net inflows through Q1 2016, despite big-name hedge fund investors, such as NYCERS, handing in redemptions through the quarter. With investors looking to invest in the largest funds and those with a proven track record through several market cycles, the USD1 billion Club will look to maintain and built on its leading position within the hedge fund industry in 2016.”

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