Hedge Fund Administrator Survey: Alternative AUA grows to $5.90 trillion by Q2 2013

Thirty-eight firms participated in the Hedge Fund Administrator Survey with the five largest accounting for 67.32% of total administered hedge fund assets

September 17, 2013 9:52 IST | India Infoline News Service
Alternative investment assets under administration (AUA) of 38 firms stood at $5.90 trillion during the end of second half of 2013, according to the latest Hedge Fund Administrator Survey from eVestment.

The survey found asset growth was ubiquitous across the industry with both small and large firms showing impressive assets under administration (AUA) gains. Average growth for the period was 14.15%, while median AUA growth was 12.74%.

Hedge Fund Adminstrator’s Survey represents the current state of the alternative investment fund administration industry and includes information from firms across the spectrum of size and services offered.

The survey is a semi-annual publication and a measuring stick of the administration industry’s hedge fund and alternatives businesses, including regional representations. Thirty-eight firms participated in the survey, with the five largest accounting for 67.32% of total administered hedge fund assets.

Unlike Europe which saw negative growth, Asia-Pacific Fund of Hedge Fund AUA experienced a significant growth period from Q4 2012 to Q2 2013.

Administrators have grown to become an integral part of the alternatives industry. The rise of regulations globally, and subsequent reporting requirements, have forced hedge funds to lean on their administrative partners more and more each survey period,” Peter Laurelli, vice president, eVestment, said.

Asia-Pacific growth is likely due to an increase in local hedge funds increasingly turning to external administration to suit demands from institutional investors. While this is a trend across the hedge fund universe globally, the impact on growing markets like Asia-Pacific is more apparent,” Laurelli added.

The survey found that firms reported $3.41 trillion in single manager hedge fund assets under administration (HF AUA). State Street, Citco and BNY Mellon lead the industry with a combined $1.66 trillion in HF AUA, while the top five firms reported $2.29 trillion in HF AUA.

HF AUA grew by 13.31% in the first half of 2013, significantly improving from the 5.56% AUA increase in H2 2012. Fund of hedge funds totaled $812.5 billion across 33 participating administrations firms and 4,036 funds. This compares to reported end-of-year 2012 AUA of $789.6 billion for the same 33 firms. Although fund of hedge funds AUA (FoHF AUA) growth was positive, underperformance relative to HF AUA growth suggests continued weakness within the fund of hedge funds space.

eVestment continued to see net investor redemptions for commingled funds of hedge funds. Six months into 2012, we estimated funds of hedge funds allocations accounted for 35.09% of single manager hedge fund assets. That figure dropped to 33.86% as of end of year 2012 and 32.67% after the first half of 2013,” Laurelli stated.

eVestment estimates funds of hedge funds experienced net outflows of $41.79 billion in the six months through June 2013.”

The survey showed that FoHF AUA in Europe declined 4.01% from $194.15B to $186.36B – following the trend in all regions except Asia where FoHF AUA increased. Conversely, Europe based HF AUA was the quickest growing based on regional classifications, increasing from $537.19 billion to $606.95 billion, or 12.99%, in H1 2013.

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