The eVestment Sizing the 2013 Hedge Fund and Fund of Hedge Funds Universe report was created with two purposes: 1) to highlight the importance of using multiple databases for industry analysis, and 2) to provide the most comprehensive look at the size of the industry in terms of AUM and number of funds.
The report looks at a universe of nearly 92,000 hedge funds, CTA/managed futures and fund of hedge funds products captured within 10 commercial datasets at the end of 2013 and compares it to the prior year. Insights from the report, according to eVestment Vice President of Research and report author Peter Laurelli, include:
1) A comprehensive look at the reported hedge fund universe provides further evidence of industry consolidation:
a) The absolute number of unique hedge funds (hedge funds & CTA/managed futures) reporting to commercial databases declined in 2013 to 9,247 from 10,149
b) The size of the reported hedge fund (hedge funds & CTA/managed futures) industry increased by $248.8 billion to $2.664 trillion
c) Firms with greater than $1 billion in hedge fund AUM accounted for 83.3% of all reported AUM, yet accounted for only 11.9% of all reporting firms.
2) As a result of consolidation and a shifting investor base towards large institutions, databases are becoming more heavily populated with large fund information:
a) The number of reporting funds with >$1billion in AUM increased by 13% to 446 and the number of those between $750 - $1bb increased 44% to 161. All smaller fund groups increased by 3 or fewer funds, or declined.
b) All the growth in reported AUM came from funds with greater than $750mm in AUM, as reported assets in the universes of funds smaller than $750mm declined
3) The U.S. is by far the dominant supplier of reported hedge fund products and assets, but China and Brazil have healthy alternative industries although China’s transparency, through the supplying of asset data, is lacking:
a) U.S.-based firms account for 38% of all unique reported hedge funds and 53% of reported AUM, followed by the U.K. with 16% of funds and 20% of assets
b) China-based firms supplied 7% of reported hedge funds (636, ranked 3rd), but reported AUM from these funds was not among the ten largest countries
c) Brazil-based firms supplied the 5th largest amount of unique hedge funds (414) and 5th highest total AUM
4) The fund of hedge fund industry’s decay (excluding separately managed accounts and advisory businesses) is evident in their reported universe information:
a) The number of reporting FoHFs declined 11% to 2,074
b) The number of reporting firms managing FoHFs declined 11% to 828
c) The reported level of FoHF AUM declined 3% to $495.1 billion
5) Funds are increasingly reporting to fewer databases, but thorough analysis of the industry requires more than one data provider:
a) The number of funds reporting to one database increased, while the percent reporting to two or more all decreased.
b) Only 64% of the reporting universe supply information to one database, while 88% of funds report to three or fewer.
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eVestment Sizing The 2013 Hedge Fund, FoHFs Universe Offers Industry Perspective
Date 27/08/2014