Billion-Dollar Hedge Fund Managers Command 92% of Fund Assets

The global hedge fund sector grew to nearly $3.2 trillion in the first quarter, managed by 5,122 single managers, according to a new report from Preqin, the alternative investment data provider.

But just 11% of those managers — members of Preqin’s $1 billion club — commanded 92% of industry capital, $2.8 trillion.

At present, some 570 managers around the world manage at least $1 billion in hedge fund assets, a year-over-year increase of 63 managers, according to Preqin.

Of these, 418 have aggregate assets under management between $1 billion and $4.9 billion, totaling $892 billion, or 28% of industry assets.

Twenty-two managers handle $20 billion or more for a total of $790 billion, or 25% of industry assets.

Following are the 10 biggest hedge fund managers, according to Preqin:

1. Bridgewater Associates, U.S., $169.5 billion (March 31)
2. AQR Capital Management, U.S., $64.9 billion (Dec. 31)
3. Man Investments, U.K., $50 billion (March 31)
4. Och-Ziff Capital Management, U.S., $47.2 billion (May 1)
5. Standard Life Investments, U.K., $35.3 billion (Dec. 31)
6. BlackRock Alternative Investors, U.S., $31.8 billion (Dec. 31)
7. Winton Capital Management, U.K., $31.1 billion (March 31)
8. Viking Global Investors, U.S., $30.3 billion (Dec. 31)
9. Millennium Management, U.S., $29.2 billion (May 1)
10. Lone Pine Capital, U.S., $29 billion (Dec. 31)

Advantages of Size

Preqin reported that smaller managers were more likely than other asset segments to offer equity strategies, possibly reflecting difficulties in scaling core equity strategies funds without negatively affecting performance.

At least 27% of all $1 billion club members run equity strategies funds, and 41% of managers with between $1 billion and $4.9 billion in assets do so.

For managers with $20 billion or more in assets, 18% offer macro strategies, and 24% offer multi-strategy funds.

Multi-strategy’s prominence among elite managers’ offerings can be explained in part by investor interest in its 12-month performance to April: the Preqin Multi-Strategy benchmark gained 8.5%, compared with 7.2% for all hedge funds.

In addition, larger managers tend to have the infrastructure and internal resources to build more complex multi-layered strategies.

Preqin said these managers can profit from using a multi-strategy approach as this can provide further diversification within a single manager structure, offer more scope to generate absolute returns and reflect the greater scalability of their funds.