Preqin: 92% of Hedge Fund Assets Managed By Top 11% of Funds

May 27 2015 | 1:38pm ET

Nearly all of the hedge fund industry’s $3.16 trillion in assets are concentrated among the relatively small pool of funds that each manage more than $1 billion, according to new research from industry data provider Preqin.

The so-called “$1 billion club” of funds, which describes 570 manages out of the 5,122 single-manager hedge funds tracked by Preqin worldwide, account for a staggering 92% of total industry assets. In other words, $2.78 trillion of that $3.16 trillion is commanded by only 11% of the industry’s participants. And the proportion is growing.

“Within this group of elite fund managers, many have steadily grown their assets over decades [by] demonstrating a consistently strong track record over many market cycles,” said Amy Bensted, Preqin’s Head of Hedge Fund Products in a press release. “Some newer entrants have either demonstrated superior performance in a shorter term to accumulate their assets, or have spun out of existing $1 billion club firms to attract significant pools of capital to their new ventures.”

Other key findings of Preqin’s research include:

- Manager concentration becomes even more pronounced among the largest funds, with the 22 managers currently handling $20 billion or more in assets under management collectively controlling $790 billion, or 25% of total hedge fund assets. Those managers with between $1 billion and $4.9 billion in AUM, meanwhile, control $892 billion, or 28%..

- 27% of funds run by members of the club are equity strategies, rising to 41% for managers between $1 billion and $4.9 billion in assets). For managers with $20 billion or more in AUM, almost a quarter of their funds are multi-strategy funds.

- For members of the Club with $20 billion or more in assets, the average year of establishment is 1992, highlighting the value of a long track record. For managers with between $1 billion and $4.9 billion, the average year of establishment is 2001.

-  202 of the 570 members of the club are in New York, and manage over $1 trillion between them. London is relatively distant second, with 83 managing $363 billion.

- King of the hill remains Bridgewater Associates, with a total of $169.5 billion in assets under management. AQR Capital Management comes in second, with $64.9 billion in assets, according to Preqin.

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