Assets under management of hedge funds increase by 14.2% in the event of disruption


On another side, P&I data showed that 15.9% of surveyed managers reported lower AUM in 2021 compared to 32.7% the previous year and just under 4% of managers reported stable AUM vs. just under 2% the previous year. Around 16% of hedge fund companies in the PI universes were new participants in the survey or comparative data as of June 30, 2020 was not available compared to around 19% the previous year.

Industry sources said conditions were right for hedge fund alpha production to be high during the year.

“Performance was very good across all hedge fund categories during the year ended June 30, and many hedge funds produced alpha above their beta targets. During this period, managers’ alpha hedge funds were at levels not seen since 2008, ”said Daniel Stern. , a New York-based senior managing director of alternative investment consultant Cliffwater LLC.

“The production of alpha by hedge fund managers is not surprising given the disruption that has taken place in many industries” since June 30, 2020, Stern said. Hedge fund strategies that also performed very well in the fiscal year ended June 30 include credit and convertible arbitrage, he added.

Some of the strategies that have had lower positive returns include fixed income arbitrage and equity market neutrality, he said.

Cliffwater expects the “very high alpha” generated by hedge fund managers to continue given the lingering uncertainty about inflation, low interest rates and how countries are dealing with variants of the hedge fund. coronavirus, Stern said.

Some hedge fund managers in P&I were unable to accept more investments in their hedge funds despite attractive investment conditions, due to capacity constraints. For example, the global assets under management of New York-based hedge fund BlackRock Inc. increased 19.3% to $ 23.1 billion in the fiscal year ended June 30, and could have be higher, but the company has closed some of its hedge funds to new investment due to capacity constraints. . The company ranks 16th on P&I listing.

“Much of our growth in the fiscal year ended June 30 came from investment gains, but we have seen strong demand from new investors,” said Abigail G. Geller, Managing Director and Co – Responsible for global distribution and strategic initiatives for BlackRock alternative investors. unity.

Ms Geller said she could not provide details on investor demand, but noted that “we are carefully monitoring capacity and are more cautious than other hedge fund managers. We had a lot of momentum in 2021. of all types of clients as investors turn to hedge funds to diversify their portfolios We could have raised a lot more in our hedge funds without capacity controls.

Among the hedge funds that BlackRock has closed for new investments are long / short equity strategies, Ms. Geller said, adding that the company has “long waiting lists” for these funds.

Demand for hedge funds from all types of investors is driven by concerns about low fixed-income yields and inflation, Ms. Geller said, noting that BlackRock’s hedge fund portfolio managers see “a huge wave of opportunities “for strategies, including event merger arbitrage. , credit and equity.

Given the wide range of global investment opportunities, there has been a wide dispersion in performance among hedge fund managers, sources said.

“We haven’t seen a level of material dispersion among hedge fund managers for 10 years. There is a big gap between the top quartile of managers and the rest. They invest aggressively and pay low prices for them. These managers are looking up the crevasse and across countries toward the recovery, ”said W. Brian Dana, Managing Director, Consultant and Director of Marketable Securities at Meketa Investment Group Inc., Westwood, Mass.

“The level of dispersion was very attractive in the 12 months ended June 30. We receive a lot of inquiries from hedge fund managers trying to capitalize on a good year,” said Mr. Dana.

The wide range of investment opportunities for hedge fund managers has widened the range of gains and losses in assets under management among individual hedge funds in P&I universe during the year ended June 30.

New York-based Senvest Management LLC, which pursues a contrarian value-based strategy, recorded the largest gain in assets under management among survey respondents of 230.2% to 3, $ 7 billion as of June 30, raising the company to 72nd from 98th previously. year.

Systematic manager Winton Group Ltd, in London, posted the largest drop in assets under management – 39.1% – to $ 7.1 billion as of June 30. Winton rose to 51st position in P&I Ranking of 2021 managers from the 33rd the previous year. Winton’s assets under management declined 46.6% during the fiscal year ended June 30, 2020.

Both companies declined to comment on their performance.

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