Bridgewater attracts more funds than the rest of the hedge fund industry
Some of the world’s biggest hedge funds are struggling to hold onto investors’ capital according to research put together by Bloomberg published earlier this week.
Bloomberg’s data shows that hedge fund attrition is now spreading to some of the industry’s largest and best-known funds. Hedge funds are currently suffering their worst year since the financial crisis. Investors pulled a total of $23.3 billion from funds in the first of 2016 according to Bloomberg which cites research from Hedge Fund Research Inc.
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While $23.3 billion may be a significant amount of cash for some industries for the hedge fund world, it’s just a dent in the total value of assets under management. Redemptions equal less than 1% of the $2.9 trillion managed by hedge funds this year. Another interesting fact? Bridgewater's assets just from pensions far eclipses the AUM of the second largest hedge fund. See chart from Towers Watson below.
Still, the very fact that some of the world’s largest hedge funds are struggling to attract investment shows how the industry is no longer as coveted as it once was. Investors appear to be no longer interested in the reputation of the fund manager, instead seeking returns and low fees over the manager’s prominence in the industry.
Bridgewater attracts more funds than the rest of the industry
Bloomberg’s figures show assets at Brevan Howard Asset Management, run by billionaire Alan Howard, have dropped to $18 billion from $23.7 billion in December, a drop of around 24%. Leon Cooperman's assets at Omega Advisors have fallen about 16% or $1.1 billion since December of last year. Assets managed by Perry Capital have declined to $4 billion from $6.6 billion in December. John Paulson’s assets under management are down by an additional 15% this year. Tudor Investment Corp now has $11 billion in assets under management versus $13 billion at the beginning of the year; that’s despite well-known manager Paul Tudor Jones slashing his annual management charge on one of his funds from 2.75% to 2.25% and cutting performance fees from 27% to 25%. Management responded by cutting 15% of the staff and now billionaire Jones is encouraging his team to take on more risk.
Lastly, Och-Ziff Capital Management Group one of the world’s largest hedge funds has seen its assets under management declined 12% to $39.2 billion from $44.6 billion over the past nine months.
One hedge fund that has been bucking the trend and taking on additional client funds while the rest of the industry struggles is Bridgewater Associates.
Since the firm started a new hedge fund strategy early last year, it has attracted $22.5 billion in new client money according to Bloomberg. In other words, inflows into Bridgewater’s new fund since the beginning of last year are the same as the outflows from the entire hedge fund industry this year.