- Advertisement -
- Advertisement -

Related

Funds of Hedge Funds Consolidate in Fight for Survival

Latest Report

- Advertisement -

Stockholm (HedgeNordic) – The fund of hedge funds industry has experienced a noticeable drop in assets under management in recent years, as institutional investors such as public pension funds have moved capital out of multi-manager vehicles in favour of picking fund managers directly. According to alternative assets data provider Preqin, funds of hedge funds collectively manage $798 billion as of June 2017, significantly below the $1.20 trillion-figure recorded in June 2008.

A special report issued by Preqin writes that most investors continue to maintain some exposure to funds of hedge funds, but the proportion of investors allocating to these vehicles and the amount of capital channelled into multi-manager funds have declined in recent years. Faced with a challenging environment, funds of hedge funds have sought to remain competitive by expanding their product line and reducing costs through merging with or acquiring peers. Preqin’s Hedge Fund Online database registered 58 mergers and acquisitions in this space since 2008, involving more than 100 fund of hedge funds managers.

With industry assets stuck in a downward spiral, the number of new players entering the fund of hedge funds arena has been dwindling almost every year since 2007. The number of launches declined from a peak of 207 in 2007 to 65 in 2016, and to a mere ten launches in the first half of this year. A total of 475 funds of hedge funds have been launched globally since the beginning of 2012, but a much higher number of 861 funds have been wound down over the same time span.

Amy Bensted, Head of Hedge Fund Products at Preqin, said in a press release: “the fund of hedge funds industry faced a series of challenges in the wake of the Global Financial Crisis: a difficult performance environment, changing regulations and a shrinking investor base. With assets under management in decline, and more funds liquidating than launching, the industry has turned to mergers and acquisitions to diversify value proposition as well as building economies of scale.” Nonetheless, she says that a majority of institutions, mainly pension funds and sovereign wealth funds, retain and continue to seek exposure to hedge funds via multi-manager vehicles.

“The advantages of multi-manager vehicles – to be able to gain exposure to flagship hedge funds and to insulate investors from market shocks – have not diminished. In fact, almost four out of five public pension funds and sovereign wealth funds invest at least in part through funds of hedge funds, representing a significant amount of capital. This demonstrates that despite contraction and consolidation, funds of hedge funds still play a crucial role within the wider industry,” Amy added.

 

Picture © – Piotr-Zajda – Shutterstock.com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Fresh Talent, New Funds: ALCUR Expands Reach in Retail Segment

After a wave of portfolio manager hires earlier this year, stock-picking fund boutique ALCUR Fonder is preparing to launch several new funds aimed at...

Quirky Questions for Kathryn Kaminski (AlphaSimplex)

Not every hedge fund conversation needs to revolve around performance charts or trade execution. In HedgeNordic’s Quirky Questions series, we look beyond the strategies to the...

Active Decisions in Passive Wrappers: Othania on ETF Innovation

Founded in early 2016 by brothers Vincent Dilling-Larsen and Christian Mørup-Larsen, Danish fund boutique Othania built its foundation on a proprietary risk model, “Tiger,”...

Rettig Appoints Crescit Manager to Oversee Hedge Fund Strategies

Simon Borgefors has joined Finnish family-owned investment company Rettig as Investment Director for hedge fund strategies in Stockholm, leaving Swedish hedge fund boutique Crescit...

€5m Ticket to Nordic High Yield From German Family Office

A German family office plans an initial €5 million commitment to a UCITS‑compliant Nordic high‑yield fund, with capacity to scale over time. According to...

From Beef to Bitcoin: August’s Wild CTA Ride

In August 2025, the CTA sub-index of the Nordic Hedge Index edged lower after two positive months, reflecting mixed performance among managers. Strong gains...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.