Research

2015 Key Trends in Global Hedge Funds

Introduction

The global hedge fund industry has seen a steady increase in its asset growth after experiencing uninterrupted redemption pressure in the second half of 2014, with asset growth totalling US$93.0 billion for the first half of 2015. Much of this growth is attributed to excellent performance-based gains which account for US$51.7 billion, together with continued investor inflows accounting for US$41.3 billion. Among regional mandates, North American and European focused funds have seen substantial asset growth after experiencing redemptions in 2H 2014. Comparatively, North American hedge funds have seen their assets grow by US$53.3 billion in 1H 2015 while European hedge funds grew by US$21.6 billion. Asian market euphoria in 1H 2015 has also seen Asia ex-Japan managers growing their asset base by US$17.2 billion. Gains made by hedge funds in 1H 2015 brings the current asset under management (AUM) of the industry to US$2.23 trillion, managed by a total of 11,211 hedge funds globally.

Figure 1: Global hedge fund industry map
 

Figure 2a: Industry growth over the years
 

Over the past nine years, the global hedge fund industry witnessed varying market conditions with periods of growth, stress and rebound. In the years prior to the 2008 financial crisis, optimism in hedge funds was seen by its accelerated growth both in the industry AUM and number of funds. In 2006, the global hedge fund industry was managed by 8,694 funds with total assets worth US$1.54 trillion. By mid-2008, the industry’s asset base grew over US$400 billion to breach the US$1.95 trillion mark, much of this is attributed to strong investor inflows. Between 2007 and mid-2008 alone, investor inflows stood at US$239.9 billion while performance-based gains stood at US$168.4 billion. The financial crisis of 2008 affected the industry’s strength with the global hedge fund industry registering losses of US$413.6 billion at end-2008, with redemptions accounting for over half of the losses. Investor redemptions continued in 2009 totalling US$122.9 billion despite excellent performance-based gains of US$131.5 billion during the year.

 

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