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Opalesque Industry Update - The 2020s have seen seismic shifts in the North American hedge fund industry with the emergence of the coronavirus and the resultant global economic fallout causing investor sentiment and equity markets to plummet, reports data and research house Eurekahedge. AuM of North American hedge funds were severely impacted, tumbling by a record $249.1bn in Q1 2020 as risk-averse investors sought to preserve their capital.
Following the sharp decline in equity markets, the Federal Reserve responded aggressively, cutting benchmark interest rates to zero and restarting quantitative easing. The US government also rolled out trillions of dollars worth of stimulus packages to support the US economy. Investor sentiment and equity market performance recovered, benefitting the hedge fund industry that rebounded strongly from its March 2020 low ($2,134.5bn), reaching a peak of $2,516.7bn in April 2022. The positive trend reversed in May 2022 as persistent inflationary pressure compelled the Federal Reserve to tighten monetary policy that, along with the Ukraine invasion, commodity prices and ongoing US-China friction, dampened market risk sentiment. • As of the end of June 2022, North American hedge fund industry AuM has declined $34.7bn from its April 2022 peak and currently stands at $2,482.1bn. • As of the end of June 2022, North American hedge fund industry AuM has declined $34.7bn from its April 2022 peak and currently stands at $2,482bn. • North American hedge funds with a global mandate have seen their share of AuM grow from 60.6% in 2007 to 69.3% in 2022, spurred by increasing investor demand for a more diversified portfolio post-2008. • The share of large hedge funds ( >$500m ) grew by 9.1% between 2007 and 2022. Conversely, small hedge funds ( < $100m ) saw their share drop by 13.9%. • Around 51% of current North American hedge funds have a track record of at least 13 years. Only around 19% of hedge funds survive more than 20 years. • The hedge fund prime brokerage industry continues to be dominated by the major US and European banks. Goldman Sachs, JPMorgan Chase and BNP Paribas Fortis collectively oversee 47% of industry AuM. • The Eurekahedge Trend Following Index returned 15.7% in H1 2022 outperforming all other hedge fund strategies tracked by With Intelligence. • Trend-following hedge funds have managed to generate the highest three-year annualized return of 10.9%. Article source - Opalesque is not responsible for the content of external internet sites |
Industry Updates
North American hedge funds decline $34.7bn from April 2022 peak
Tuesday, August 02, 2022
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