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2012 Key Trends in Global Hedge Funds

Introduction

Hedge funds started off 2013 in a strong fashion with the industry delivering excellent returns and also attracting capital from investors. Currently the size of the industry stands at US$1.8 trillion1 and is set to hit its historical high in coming months.

Over the last 13 years the sector has witnessed varying trends – a period of tremendous growth, a downturn and a rebound. In year 2000 total assets in the global hedge fund industry stood at US$335 billion, managed by 2840 funds. Over the next seven and a half years the industry’s asset base grew by almost 500% to cross US$1.95 trillion by mid-2008. During this period the total fund population also increased by nearly 3.5 times.

The financial crisis in 2008 reversed this growth trend with assets falling to US$1.29 trillion by April 2009 due to performance-based declines and heavy redemptions by investors. The strong rallies in global markets in the last eight months of 2009 and the subsequent positive asset flows in 2010 aided the industry’s recovery but concerns about the global economy and the European debt crisis stalled this recovery in 2011 and most of 2012.

Figure 1: Industry growth since 1999
  

Despite net negative asset flows in 2012, the industry witnessed a net increase in assets under management (AUM) through strong performance performance-based gains of US$72.8 billion.

 

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Footnote

1 January AUM data in this report may differ slightly from the February Asset Flow Report