New research released Thursday by Preqin’s Hedge Fund Analyst showed that midsized hedge funds outperformed funds of other sizes in 2013.
Hedge funds with assets under management of $100 million to $499 million posted a 12-month average return of 13.8% over 2013, and those with $500 million to $999 million saw an average return of 13.7%.
Large funds with assets of $1 billion to $5 billion and ones with assets of less than $100 million were up 12.1% and 11. 5%, respectively.
Size and Performance
The research found that as fund size increased, the spread of performance between the 25th and 75th percentile returns narrowed. The largest funds showed the smallest dispersion of returns, but those returns tended to be lower than those of funds with less than $1 billion under management.
A lower proportion of midsized hedge funds experienced losses in terms of cumulative returns in 2013, compared with large and small funds. Twelve percent of hedge funds with $100 million to $499 million suffered losses over the year, and just 8% of those with $500 million to $999 million had losses.
Top-performing funds with assets of less than $100 million showed the largest variation in risk-return profile over the three-year period that ended Jan. 31, with these funds exhibiting higher returns and higher volatility than their larger counterparts, according to Preqin.
Twenty-seven percent of midsized hedge funds with $100 million to $499 million under management posted returns in excess of 20% in 2013. By comparison, 19% of hedge funds in the $1 billion-$5 billion range did so.