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Alternative Market Briefing

Larger hedge funds more resilient post financial crisis – Conclusion

Thursday, September 06, 2012

From Komfie Manalo, Opalesque Asia:

Before the 2008 global financial crisis, smaller Asia-focused hedge funds generally outperformed their much larger peers. But this trend was reversed after the crisis with the exception of funds with assets between $200m and $500m, said GFIA’s latest Asia Note report.

However, hedge funds with assets under management between $500m and $1bn performed reasonably well during the pre- and post-crisis periods. The Singapore-based data provider attributed this to the eventual consolidation in the industry with capital inflow to strong performers or superior managers joining large funds. But GFIA noted that there is still strong outperformance against the benchmark from individual funds of all sizes, especially in smaller funds.

Comparatively, data compiled by GFIA showed that hedge funds with less than $10m in assets gained on average +0.21% between 2003 and 2012, against the average +0.02% profits recorded by funds with assets between $500m and $1bn during the same period. But this trend was reversed post crisis between 2008 and 2012 when hedge funds with less than $10m in assets declined an average -0.04% during the period compared to +0.08% gains made by hedge funds with assets between $500m and $1bn during the same period.

"Interestingly, we saw opposite trends emerge pre and post crisis when comparing returns of different size buckets, relative to the market benchmark. In the ......................

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