Editor’s Letter - Issue 125

The global hedge fund industry has made new highs in assets and performance, as have several of the managers profiled in this issue. HFR and Evestment both place industry assets at $3.1 trillion while Preqin put the figure at $3.3 trillion and BarclayHedge is in the middle at $3.2 trillion. Performance in 2017 to July ranges between about 4.5% to 7.5% depending on index providers and strategies. Equity and event-driven managers are generally performing best, and there is a wide spread of performance within the relative value, CTA and macro spaces.

The asset split by strategy varies much more than do assets and performance, according to how managers are defined and categorised by themselves (and/or by database providers). For instance, relative value is largest at $827 billion per HFR whereas Preqin’s relative value tally is just $341 billion. Preqin ranks macro biggest at $955 billion while HFR’s macro total is $579 billion.

Newer and smaller managers are punching above their weight. The fact that HFR’s equal-weighted indices are outperforming its asset-weighted indices shows smaller managers outperforming, in absolute terms. Some 1,006 new funds launched in 2016, according to Preqin. And in terms of numbers, the industry is dominated by smaller funds. Nearly half of hedge funds (and fund of funds) – or close to 5,000 of them – run below $100 million.