By Nell Mackenzie
LONDON (Reuters) – The most important gamers now make up about three-quarters of the hedge fund business, because the likes of multi-strategy companies have taken up the lion’s share of the enterprise, stated a Financial institution of America report seen by Reuters on Tuesday.
Hedge funds that handle greater than $5 billion in belongings grew their business share to 73% by the top of the second quarter of 2024, up from 65% in 2018, in accordance with the report, which was despatched to shoppers on Monday.
This got here on the expense of mid-sized companies between
$1 billion and $5 billion in dimension, which noticed their proportion of business cash shrink 6% in the identical timeframe.
Multi-strategy companies appear to be a “main driver,” stated the report which was the results of a survey of 160 hedge fund buyers managing roughly $680 billion that embody pensions, household places of work, sovereign wealth and funds of hedge funds.
Nearly half of these surveyed stated they deliberate to each enhance the cash they allocate to hedge funds and the variety of hedge funds of their portfolios.
However the roughly 6% that plan to take cash out of the sector largely stated they might select a unique form of funding class like non-public fairness, or non-public credit score.
The larger the investor, the stickier their leaving plans, both totally or partially, the survey confirmed.
Two-fifths of these surveyed agreed with their hedge funds that efficiency must surpass a sure threshold – or hurdle price – earlier than the appliance of charges.
These thresholds, referred to as “hurdle charges”, included the risk-free price, an agreed value or used fairness indices as a benchmark, stated the report.
High investor issues included hedge funds crowding into the identical trades, not holding sufficient draw back protections and geopolitical dangers, the survey stated.
