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Alternative Market Briefing

U.S. accounts for three-quarters of AUM in the global hedge fund industry

Wednesday, July 15, 2020

Laxman Pai, Opalesque Asia:

The United States accounts for three-quarters of Assets Under Management (AUM) across the globe in the hedge fund industry, said a study.

Despite hedge fund activity in other regions globally expanding alongside that of the United States, the country accounts for 3,405 of the 5,523 institutional investors active in hedge funds and 3,319 of the 5,383 active hedge fund managers, said a report by ResearchAndMarkets.com.

Given the fee pressure, fund managers in some places have given up the traditional 2-20 fee structure for 0% management fee and 30% performance fee, it said.

According to the report, fund managers are also increasingly applying artificial intelligence & machine learning (AIML) techniques to improve operational efficiencies and boost returns. There are 150 active crypto hedge funds collectively managing US$1bn AUM (excluding crypto index funds and crypto venture capital funds). Over 60% of these funds have less than US$10m in AUM with fewer than 10% managing over US$50m.

Asset Inflow has been consistently negative over the years. Over the last decade, the global hedge fund industry initially saw inflows as investors put money back to work following the global financial crisis. However, three out of the last four years saw overall outflows totaling about $140 billion.

Meanwhile, a massive rally for long-only assets has made generating alpha difficult for hedge fund managers. In absolute terms, performance in the 2......................

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