Industry Updates

Pensions account for about 8% of the hedge fund manager's investor base while family offices represent about 54% - InfoVest21

Wednesday, March 20, 2013

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Opalesque Industry Update: Infovest21's just-released survey results for its "Manager Snapshot Survey," provides a profile of the typical hedge fund organization in today's environment.

Highlights include:

Investor Base Changes

The typical hedge fund organization has approximately 110 investors

High net worth/family offices account for 54% of the average managers' investor base. Financial institutions account for about 11% while funds of funds comprise 13%. Pensions represent about 8% of the investor base while foundations and sovereign wealth funds each account for about 3%.

High net worth/family offices investors and foundations represent a higher percentage of the investor base in 2013 than 2010. The percentage of pensions, endowments and funds of funds, however, fell off from 2010 levels.

Lois Peltz, president of Infovest21, stated, "Looking out one year, managers expect the percentage of high net worth/family offices will drop to 49% of their investor base. Funds of funds are expected to account for an increased percentage i.e. 15% while pensions are expected to inch up slightly to 9% and foundations to advance to 4%. Financial institutions (e.g. banks, insurance company) are expected to stay about the same percentage while sovereign wealth funds are expected to drop to 1.7%."

Product Base

Commingled vehicles account for about 61% of the product base while customized mandates and retail products account for 24% and 9% of the product base respectively.

Over 89% of the respondents do not offer '40 Act mutual funds.

Only 14% are underlying managers in a '40 Act mutual fund.

Performance

Almost 90% of the respondents had positive performance in 2012. The average gain was 11.7%.

Almost 72% of the respondents are above their high water marks while over 17% are below.

Terms

The average fee structure is a 1.5% management fee and an 18.2% performance fee.

19% have decreased their management fees while 2% said the management fee increased. Over 10% said they decreased performance fees while the remaining 4% increased performance fees.

Comparison of historical responses

The average manager's assets under management in the 2013 survey was $2.2 billion compared with $2.0 billion in 2010.

Average fees are slightly lower in 2013 than in 2010.

The bias toward large hedge fund managers continues to be managers' largest concern in 2013 as it was in 2010 however it is cited by a smaller percentage of the respondents.

The survey was conducted in February. Sixty managers responded.

Infovest21

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