Mon, Dec 18, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Mid-sized hedge funds achieve higher returns in 2013 - Preqin

Thursday, March 27, 2014
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:

  • As fund size increases the spread of performance between the 25th and 75th percentile returns narrows; the largest funds show the smallest dispersion of returns, however these returns tend to be lower than funds with less than $1bn in assets under management.
  • A lower proportion of mid-sized hedge funds saw losses in 2013 compared to large and small hedge funds. Among mid-sized hedge funds with $100-499mn and $500-999mn in AUM, only 12% and 8% of these funds respectively saw losses in terms of cumulative returns over the year.
  • Top performing funds with assets of less than $100mn have shown the largest variation in risk-return profile over the three-year period ending 31 January 2014, with these funds exhibiting higher returns and higher volatility than their larger counterparts.
  • 27% of mid-sized hedge funds with AUM of $100-499mn posted returns in excess of 20% in 2013, higher than the proportion of larger hedge funds (AUM of $1-5bn) that achieved this (19%).
  • 48% of hedge fund investors surveyed stated that returns are a key factor when looking at a fund manager and in particular 21% of investors surveyed by Preqin stated the potential for better returns from smaller managers is a key reason for preferring funds with less than $1bn in assets.
  • Investors are looking across a wide range of fund sizes in 2014; funds in the group $1-5bn are the most sought, with 57% of institutional investors seeking funds of that size in 2014, followed by 52% and 47% of investors looking at funds between $100-499mn and $500-999mn respectively.

Comment:

“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

Preqin

Press Release

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Mediobanca acquires majority stakes in Swiss hedge fund[more]

    Komfie Manalo, Opalesque Asia: Listed diversified banking group Mediobanca SpA said it has acquired a majority stake in Geneva-based hedge fund firm RAM Active Investments SA (RAM AI), an active and alternative asset manager offering a range of act

  2. North America - Miami could attract hedge funds if SALT deductions axed[more]

    From Law360.com: For years, inertia has been Nitin Motwani's greatest foe in his attempts to lure hedge fund owners in the northeast to Miami, which he has pitched as a tropical low-tax paradise. But with the Republican tax bill proposing to eliminate deductions for state and local taxes, he's sensi

  3. Northleaf Capital Partners closes debut private credit fund on $670M[more]

    Bailey McCann, Opalesque New York: Northleaf Capital Partners has closed its debut private credit fund - Northleaf Private Credit I - on $670 million. The vehicle will invest in private credit transactions in Europe and North America, with a primary focus on lending to private equity-backed compa

  4. ...And Finally - The ongoing gun saga in the U.S.[more]

    From Newsoftheweird.com: As elder members of the First United Methodist Church in Tellico Plains, Tennessee, gathered on Nov. 16 to discuss the recent church shooting in Sutherland Springs, Texas, one of those present asked if anyone had brought a gun to church. One man spoke up and said he c

  5. Opalesque Exclusive: Credit Suisse Asset Management's NEXT Investors leads $6M Series A round for LUX Technology and Services[more]

    Bailey McCann, Opalesque New York: Credit Suisse Asset Management's NEXT Investors has led a $6 million Series A funding round for LUX Technology and Services, a business and technology solutions provider for the alternative assets industry. The investment will be used to fuel growth of Trans