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Portfolio > Alternative Investments > Hedge Funds

Billion-Dollar Hedge Funds Manage 88% of All Industry Assets

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The ranks of hedge fund managers with at least $1 billion under management grew by a net 98 over the past year to 668 managers, alternatives data provider Preqin reported Friday.

These managers account for just 12% of all hedge fund managers yet represent 88% of total industry assets.

Firms with between $1 billion and $4.9 billion in assets manage 27% of total industry assets, the largest proportion of any fund size, and those with more than $20 billion manage 21% of assets.

According to Preqin, the proportion of total industry assets held by these funds declined from 92% in 2015, with firms in the $1 billion club now managing $2.75 trillion in total assets under management, down from $2.78 trillion at the end of the first quarter of last year.

In the same period, total industry assets fell from an estimated $3.16 trillion to $3.13 trillion, following challenging market conditions, the conversion of some big funds to family offices and high-profile redemptions from several institutional investors.

Following are the top 10 managers by total assets under management:

  • Bridgewater Associates (U.S.): $146.3 billion (as of Feb. 29)
  • AQR Capital Management (U.S.): $74 billion (as of Sept. 30)
  • Man Group (U.K.): $53.1 billion (as of March 31)
  • Och-Ziff Capital Management (U.S.): $42 billion (as of April 1)
  • Standard Life Investments (U.K.): $38.4 billion (as of Dec. 31)
  • Winton Capital Management  (U.K.): $34.5 billion (as of March 31)
  • Millennium Management (U.S.): $33 billion (as of March 1)
  • Renaissance Technologies (U.S.): $32.3 billion (as of March 31)
  • BlackRock Alternative Investors (U.S.): $31 billion (as of Dec. 31)
  • Two Sigma Investments (U.S.): $31 billion (as of Dec. 31)

Other Findings

Fifty-four percent of hedge funds with $1 billion or more in assets experienced net inflows through the first quarter, the highest proportion of any fund size.

Nine percent of these big funds saw no change in assets, while 37% suffered losses through the quarter.

Preqin’s report showed that managers with upward of $20 billion under management experienced a decline in assets of 15% since May 2015, including the behemoth Bridgewater Associates, whose assets fell by $23 billion from the 2015 first quarter.

This indicated that even the elite managers were not immune to redemptions by institutional investors, such as the $51 billion New York City Employees Retirement System, which voted to pull out of its $1.5 billion portfolio of hedge funds.

The hedge fund sector as a whole reported net outflows of 14.3% in the first quarter, following 8.9% net outflows in the fourth quarter, Preqin reported.

According to the report, billionaire club members invest the largest proportion of their assets in equity strategies, and the least in CTAs and niche strategies.

Multi-strategy funds are most common among the very largest firms, with a fifth of $20 billion-plus managers employing several strategies. Preqin said that because these funds trade in multiple markets, they can accumulate more assets without compromising their overall strategy and return potential. North America accounts for 48% of $1 billion-plus managers, 479 firms, followed by Europe with 44%, or 129 firms, and Asia/Pacific and elsewhere with 7%, or 60 managers. New York is home of 236 big managers with a total of $986 billion in assets, trailed by London’s 82 managers with $390 billion in assets.

Five firms that hung out shingles in 2015 have already amassed assets of $1 billion or more, according to Preqin.

George Soros’s former associate Scott Bessent launched Key Square Group, and Isaac Corre, formerly with Eton Park Capital Management, rolled out Governors Lane.

Verde Asset Management spun off Credit Suisse Hedging-Griffo, Systematica Investments spun off BlueCrest Capital and Garda Capital Partners split from Black River Asset Management.

“Newly established firms that can demonstrate a strong pedigree at other $1 billion club firms have entered the club by obtaining large capital commitments from day one, while more established firms have gained access through asset growth,” Preqin’s head of hedge fund products Amy Bensted said in a statement.

“With investors looking to invest in the largest funds and those with a proven track record through several market cycles, the $1 billion club will look to maintain and build on its leading position within the hedge fund industry in 2016.” 

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