More investors allocate $1bn or more, and total allocation of this group surpasses $800bn
The Billion Dollar Club of hedge fund investors continues to expand, as new members join their ranks and total combined allocations to the asset class rise. This group of those investors allocating $1bn or more to the industry has seen a net increase of eight members in the 12 months to June 2017, and now stands at 242 institutions. Furthermore, the level of capital invested in hedge funds by these investors has grown by 6% over the past year, and now stands at $805bn. The Billion Dollar Club of investors collectively accounts for almost a quarter of the total institutional capital allocated to the asset class.
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Key Billion Dollar Club Hedge Fund Investors Facts:
- Over the course of the past year, 36 institutional investors have entered the Billion Dollar Club and 28 have exited – a total of 242 investors now invest $1bn or more in hedge funds.
- Collectively, the Billion Dollar Club allocate $805bn to the asset class, a 6% increase from June 2016 when these investors allocated $763bn to hedge funds. This represents 24% of total hedge fund AUM.
- Public pension funds account for the largest proportion (28%) of capital allocated by the Billion Dollar Club, and represent the highest number of new entrants to the club (11) over the past 12 months.
- North America accounts for the greatest proportion (61%) of capital invested in hedge funds by the Billion Dollar Club, while Europe-based investors account for just over a fifth (21%), and Asia accounts for 9%.
- Members of the Billion Dollar Club give greater weight to hedge funds within their portfolios. They typically allocate 16.0% of their total AUM to hedge funds, compared to 14.5% among all other investors.
- However, this represents a decrease over the past 12 months: the average allocation to hedge funds of a Billion Dollar Club member was 16.8% as of June 2016.
- Overall, there has been a net reduction in allocations in the past 12 months: 37% of Billion Dollar Club members have decreased their allocations in the past year, while 28% increased them.
Amy Bensted, Head of Hedge Fund Products:
“Investor outflows dominated the narrative surrounding the hedge fund asset class in 2016. However, despite some high-profile redemptions and withdrawals in recent years, the group of the largest hedge fund investors continues to grow in both number and influence. The past 12 months have seen a net increase of eight institutions, and total allocations from these investors now exceed $800bn collectively.
The Billion Dollar Club consequently has great influence over the industry; one in every four dollars in hedge funds today comes from this group of 242 institutions. These investors are increasingly using their collective might to lobby hedge fund managers to improve the alignment of interests between the two parties. At a time when fund terms and conditions are in the spotlight, this will ultimately improve alignment for all institutional investors in the asset class.”
Article by Preqin