Fund of Hedge Funds Assets

Fund of Hedge Funds Lose Assets in 2009

Fund of hedge funds have lost significant assets this year while single hedge funds' total assets increased 3.39% to $2.037 trillion last month. Fund of hedge funds have lagged behind actual hedge funds in performance and after a tough last year investors are unwilling to stomach further losses. This year has been the worst year on record for fund of hedge funds, global net redemptions are $164 billionin the first eleven months of 2009. Total assets are now at $440 billion, dropping by almost half from the peak in May 2008.

Funds of hedge funds have underperformed the hedge-fund industry by more than eight percentage points so far this year, significantly worse than in previous years. The Eurekahedge fund of funds index was up 9.17% for the year to the end of November, while the overall Eurekahedge hedge fund index was up 18.24%; similarly, the HFRI fund-of-funds index published by data provider Hedge Fund Research was up 10.69%, while its overall hedge-fund index was up 18.72%.

In previous years, funds of hedge funds generally underperformed hedge funds by at most a couple of percentage points, according to Hedge Fund Research's figures, with the difference largely attributable to fees.

The fund-of-hedge-funds industry comprises 3,110 funds, according to Eurekahedge. This is 15% down from the total at the end of 2007. The fact that the number of funds has fallen by only 15%, while assets under management have fallen by 50%, indicates that most managers have continued to run their funds but with reduced assets. Source

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