Opalesque Industry Update - New research from Preqin’s Hedge Fund Analyst reveals that mid-sized hedge funds were the best
performers in 2013 compared to other fund sizes. Mid-sized hedge funds with assets under management
(AUM) of $100-499mn and $500-999mn posted 12-month average returns over 2013 of 13.79% and 13.71%
respectively, beating large funds (AUM of $1-5bn) and small funds (AUM of less than $100mn), which posted
12.08% and 11.45% respectively.|
Other Key Facts:
“Much of the capital inflow into the hedge fund industry over the past few years has been to just the largest funds, with investors looking for the proven track record and experienced investment teams that these larger hedge fund managers often provide. However, our analysis shows that investors are looking at a variety of fund sizes for investment in 2014 and different investors have different return objectives and risk appetite from their hedge fund investments. Performance remains a key factor in the selection process and Preqin’s latest research demonstrates that it is not always the largest funds that are providing the best performance in terms of risk and return.
As funds become larger, the distribution of returns among the best performing funds moves towards the lower end of the return spectrum. Funds in the midsized groups i.e. those from $100-499mn or from $500- 999mn, have shown the highest mean and median returns in 2013. The size range $500-999mn had the lowest proportion of funds suffering a loss in 2013, and the longer term return and volatility characteristics of these funds are similar to funds with assets of more than $1bn. Therefore, those investors which are looking to move away from investing in just the largest funds, but without taking on too much volatility, may choose to look towards investing in those funds with more than $500mn in assets.” Amy Bensted, Head of Hedge Fund Products - Preqin