Hedge Fund Assets Down USD700bn, Says Report

by Carla Johnson, Investors Offshore.com

23 February 2009

It has been estimated in a new report that total hedge fund assets at the end of 2008 stood at USD1.43 trillion, a decline of over USD700bn or 34% from 2007 levels.

According to Crédit Agricole Structured Asset Management's (CASAM) 2008 Industry Report on hedge funds and commodity trading advisors (CTAs), the total number of hedge funds is estimated to have declined from over 9,700 at the end of 2007 to around 8,900 today.

In terms of assets under management, convertible arbitrage funds suffered the largest decline with assets plummeting over 52%, followed closely by emerging market funds with a drop of 51%. Excluding CTAs, the only hedge fund strategy to increase assets in 2008 was global macro, with a total increase of USD28bn or 13%.

In the worst year on record for the industry, hedge funds as a whole, excluding CTAs, posted a negative performance of -19.2% for 2008, with those invested in emerging markets posting the lowest results at -34.3%. Global macro managers achieved positive performance of 3.7%, while equity market neutral and merger arbitrage managers remained flat for the year says the report, which was compiled in conjunction with the Center for International Securities and Derivatives Markets at the University of Massachusetts Amherst.

CTAs as a whole posted a performance gain of 21.8% on an equal weighted basis, making 2008 the best year on record since 2002. Assets managed by CTAs are estimated at USD150bn, an increase of approximately 20% in the last 12 months.

The return for funds of funds overall in 2008 was similar to that for hedge funds at -17.0%.

Recommended