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Blackstone tops rankings as global FoHFs industry stalls at $595bn, says InvestHedge’s Billion Dollar FOHFs Club survey

Monday, September 06, 2010
Opalesque Industry Update -
• The funds of hedge funds industry lost a net $3.6 billion in assets during the first half of 2010, compared to $95 billion a year ago

• Firms with more than $1 billion in assets now manage a combined total of $595 billion

• $210 billion is in the hands of the 10 largest FOHFs managers

• 106 funds of hedge fund management firms now control hedge fund assets of $1 billion or more

• Blackstone Alternative Asset Management emerges as largest funds of funds group in the world

The global fund of hedge funds industry, as represented by the largest players, saw a small decline in overall assets of -0.6% in the first half of 2010. This asset decline is in line with the average funds of hedge funds performance for the same period, according to the latest survey of the InvestHedge Billion Dollar FOHF Club.

The largest funds of funds—those with more than $1 billion in assets under management – now control a combined amount total of $595 billion in assets, according to the six monthly 2010 asset flow survey carried out by InvestHedge, the leading publication about investors in hedge funds. The top 10, however, added $6.4 billion and grew by more than 3%.

―Some of the savvier end investors are now choosing to allocate directly, but the role of the funds of hedge funds is not about to be eliminated. Funds of funds will simply no longer be paid for access to the brand names, and those that simply built businesses on an asset gathering model will soon find it impossible to justify their fees‖ says Niki Natarajan, Editor of InvestHedge.

―A number of funds of funds are offering new bespoke services such as portfolio customisation, while others are creating niche or more exotic offerings to complement plain vanilla multi-manager portfolios. Our view is that funds of funds that succeed in offering a performance double-whammy of a top-down global macro view mixed with original high octane managers will have no problem staying in business.

There are now 106 funds of hedge fund management companies in the InvestHedge Billion Dollar FOHF Club, with 9 leaving the rankings in the first six months of 2010, including Ivy Asset Management, whose business is now being unwound. Asset levels in the top fund of funds have now shrunk by more than 50% from $1.12 trillion in the hands of 160 billion dollar funds of funds at their peak in June 2008.

Blackstone Alternative Asset Management’s assets have grown by 2.29% in the first six months of 2010 to gain top slot in the rankings and become the largest funds of hedge funds in the world for the first time. UBS Global Asset Management A&Q, with total assets of $24.2 billion, has dropped to third place. HSBS Alternative Investments is now number two with funds of hedge funds assets of $26.8 billion, although it has $33.2 billion in total in alternatives (including custody assets).

A year ago, Man Investments and Union Bancaire Privée were at 2nd and 4th positions in the list respectively, but both firms have now fallen out of the top 10. Swiss based UBP, which now has $16.1 billion under management, is in 11th place, while the multi-manager business of Man Investments has fallen to 13th place. BlackRock Alternative Advisors, Morgan Stanley and GAM have re-entered the top 10.

Top 10 largest Funds of Funds ..... 30-Jun-10
Blackstone Alternative Asset Management ..... 28.51
HSBC Alternative Investments ..... 26.83
UBS Global Asset Management A&Q ..... 24.21
Grosvenor Capital Management ..... 22.95
Goldman Sachs Asset Management ..... 20.82
Permal Investment Management ..... 19
Morgan Stanley ..... 17.53
GAM Multi-Manager ..... 17
BlackRock Alternative Advisors ..... 16.8
Pacific Alternative Asset Management Co. ..... 16.6
Total ..... 210.25

Source: InvestHedge

(press release)


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