| Hedge fund assets jump over the 1 trillion hurdle |
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| 16/05/2004 | |
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The hedge fund industry just overpassed the symbolical US$1 trillion mark according to research by the Alternative Fund Services Review (AFSR) and Correctnet, a provider of web reporting solutions for asset managers. This stands in contrast with the previous US$750 billion estimation made by TASS Research in February 2004, and can be accounted by the different definition of "alternative investment", double counting, and the inclusion of custody or retail assets. Still, the AFSR points out that "the sum total is still proof the hedge fund world is far larger than those using outdated two-year-old estimates care to believe." These continuous inflows of money into hedge funds or funds of hedge funds have lately been illustrated by various pension funds' decisions to increase their alternative asset allocation. Railpen has recently decided to set its alternative investment target to 5%, while the BT scheme has pledged a £500 million investment in alternative assets. "In addition to its appeal as an investment product, the industry has successfully addressed many of the concerns raised by institutional investors, such as transparency and accurate, timely reporting", comments William Keunen, director of Citco Fund Services, one of the hedge fund administrator that has taken part in the AFSR study. Misleading In mid-2003 hedge fund and fund of funds assets under administration from 30 firms measured by AFSR hit US$745billion. Less than a year later assets have risen to US$1.1 trillion from 39 firms. "Although much of this increase stems from the nine new firms participating in the survey, existing administrators had mean average 32% growth in assets under administration since the 2003 survey", said AFSR in a release. According to the Hennessee Hedge Fund Index, hedge funds produced a negative return of -0.78% in April, bringing the 2004 year to date return to +2.54%. Charles Gradante, Managing Principal of Hennessee Group LLC, points out that whereas hedge funds have taken the flak of the downturn in the market, "as an asset class, hedge funds continue to protect the downside against equity and bond market declines." "Despite this, hedge fund managers have indicated concern as to whether an upward move in interest rates will be offset by earnings expansion that exceed the market's expectation for the third and fourth quarters", concluded Mr. Gradante. This e-mail address is being protected from spam bots, you need JavaScript enabled to view it |
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