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The Rise of the Billion-Dollar Hedge Funds

Big-money funds account for just 3.9% of the total, but manage 60% of assets


The hedge fund universe is dominated by funds with more than $1 billion dollars under management, a new study finds.

Investment research firm PerTrac found that while such big-money funds made up less than 3.9% of the the total, they manage 60% of assets under all single managers.

American hedge funds run by single managers represented 42.3% of worldwide hedge fund assets, with British-run funds coming in a distant second with 25.6% of total assets. Better than half of hedge funds operate in U.S. dollars.

PerTrac concluded that investors seek safety in larger funds even though smaller hedge funds offer a better return on average.

In 2011, 322 single-manager hedge funds managed assets greater than $1 billion.

Institutional investors were even more likely to flock to large hedge funds and funds of hedge funds (FoHFs), PerTrac found. FoHFs with assets over $1 billion rose in number by 18% last year, even as the total number of FoHFs fell 4.8%.

To read PerTrac’s complete study on the composition of the hedge fund industry, please click here.

Article printed from InvestorPlace Media,

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