The global fund-of-hedge-funds sector emerged from 2015 poorer by $12 billion, according to a new report from alternatives data provider Preqin.
Funds of hedge funds lost more than a third of the $33 billion they added in 2014, finishing the year with $807 billion under management.
Only North America-based managers grew in 2015, adding $9 billion in new assets and ending the year with $601 billion, a continuation of year-on-year growth since 2011.
European managers had a much tougher time last year, losing $14 billion to finish with $183 billion in capital. Asia/Pacific managers, after taking in $5 billion in 2014, lost $7 billion last year and ended with $18 billion under management.
Further growth in 2016 may be driven largely by performance, Preqin said. In a poll, 63% of institutional investors with allocations to funds of funds said their performance expectations had been met in 2015.
Last year, Europe-focused managers reported a 4.3% return, compared with a loss of 0.6% for their North American counterparts. Asia/Pacific-focused funds finished the year up 5.9%.
At the end of 2015, Preqin asked the institutional investors in its database with exposure to funds of funds about their investment plans in 2016. Twenty-nine percent said they would maintain their exposure, while 6% said they would reduce it and 2% would increase it.
Sixty percent of institutional investors said they had not invested in 2015 and would not do so this year.