Industry Updates

InvestHedge Billion Dollar Club survey: Global funds of hedge funds industry drops in size but still manages $735bn

Friday, September 04, 2009

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Opalesque Industry Updates: The funds of hedge funds industry shrank a further 13.5% in the first half of 2009, with the previous freefall broken by relatively strong positive performance of 5.12% to the end of July, according to the latest survey of the InvestHedge Billion Dollar Club.

The largest funds of funds—those with more than $1 billion in assets under management – now control a combined amount of $613 billion in assets, according to the six-monthly 2009 asset flow survey carried out by InvestHedge, the leading publication about investors in hedge funds.

For the first time, however, this number has been added to the assets of all the many other non-InvestHedge Billion Club members also in the InvestHedge Database to produce a total of $735 billion, the first ever definitive total figure for the global funds of hedge funds industry.

If the global hedge fund industry is estimated at close to $1.7 trillion in total assets then funds of funds still allocate about 40% of that total.

“A lithe funds of funds industry is rebounding from the crises of the last 18 months”, says Niki Natarajan, editor of InvestHedge. “It is leaner, fitter and only those that have shown themselves to have managed the different challenges with a defined, repeatable and explainable process are set to survive and win the institutional money that is certain to come back.”

“The industry is in the process of re-emerging as the tool of choice for investors to allocate assets to absolute returns funds according to their guidelines, time frames and liabilities. The re-born industry will be more in line with investors.”

There are now 117 funds of hedge fund management companies in the InvestHedge Billion Dollar Club, with 18 leaving the rankings in the first six months of 2009. Over the last 18 months since the start of the sub-prime mortgage crisis, some 48 groups fell out of the rankings after shutting their businesses or the assets falling below the $1 billion level. Over 18 months, the industry lost nearly 40% of its assets, equivalent to nearly $400 billion.

UBS Global Asset Management A&Q with total assets of $31 billion retained the top slot in the rankings. If the assets of UBS Wealth Management USA are added in, UBS has a total of $33.3 billion, making it the largest fund of fund management group in the world.

With $26.4 billion, Man Investments is now the second largest, having formally combined the assets of its RMF Investment Management, Glenwood Capital Investments and Man Global Strategies units.

Blackstone Alternative Asset Management has jumped to third place with $25 billion in assets.

Top 10 largest Funds of Funds:

	30 June 2009 Assets $bn
UBS Global Asset Management A&Q	31.43
Man Investments	26.4
Blackstone Alternative Asset Management	25.07
Union Bancaire Privée	23.83
HSBC Alternative Investments	22.27
Goldman Sachs Asset Management	21.4
Grosvenor Capital Management	20.3
Permal Investment Management	18.7
GAM Multi-Manager	16.1
Pacific Alternative Asset Management Co.	15.63
Total	221.14