51 Institutional Investors Join The $1Bn Hedge Funds Club Over The Past Year by Preqin
A total of 51 institutional investors have entered the “$1bn Club”, LPs with $1bn or more allocated to hedge funds, over the past year; 27 investors dropped out of the Club.
The worldwide “Club” of the largest investors in hedge funds has seen a net migration of 24 investors into the Club over the past 12 months. A total of 51 investors have increased their allocation to the asset class to over $1bn, while 27 investors have seen their allocation fall below the $1bn mark. There are now a total of 227 investors around the globe that have $1bn or more in assets invested in hedge funds, and collectively these investors have $735bn invested in the asset class. This represents 24% of the total capital invested in the industry, and is up 13% on the amount of hedge fund assets the Club had in their portfolios as of May 2014.
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Hedge Funds – Other Key “$1bn Club” Investor Stats:
- New Entrants: Private sector pension funds make up the largest proportion of new entrants over the past year, accounting for 29% of new members. Over three-quarters (77%) of new entrants are based in North America.
- Breakdown of the Club: Public pension funds account for the largest proportion of capital invested in hedge funds by the Club (25%), despite a handful of high-profile exits from the asset class by these investors over the past year. Sovereign wealth funds follow this with 16% of the total capital invested by the Club.
- Preferred Methods of Investing: 45% of the Club’s members solely target direct investments in hedge funds when committing to the asset class, compared to 33% of all other investors. The $1bn Club are also less likely to invest solely with funds of hedge funds, with only 8% of members investing via this route.
- Number of Investments: The average number of hedge funds that investors in the Club have in their portfolio is 30. This compares to only 8 hedge funds for all other investors.
- Main Strategies Being Sought: Macro funds are the preferred strategy for the $1bn Club investors, with 48% of members targeting this strategy over the next 12 months. This is followed by long/short equity being sought by 39% of investors.
- Average Allocations: $1bn Club investors allocate 15.9% of their assets to hedge funds on average, compared to 14.3% of assets for all other investors.
“The past 12 months have seen mediocre performance generated by the hedge fund industry as a whole. Although perhaps not the sole cause, a handful of high-profile pension funds have publically announced their intention to scale back their hedge fund allocations. Nevertheless, industry assets have seen notable growth and inflows from investors have continued to pour in, driven by a number of large investors allocating at least $1bn to hedge funds.
Investors that form the $1bn Club are significant players within the hedge fund industry, and not just for the significant amounts of aggregate industry capital they manage. They are also key drivers of growth for the industry and are desirable sources of capital for hedge fund managers. The rise in the number of $1bn Club members over the past few years shows that the appetite for major investment in hedge funds remains strong, and appetite shows no signs of abating.”
Amy Bensted – Head of Hedge Fund Products, Preqin