FoHF assets leap in Asia, stumble in Europe

The second half of 2013 saw fund-of-hedge-fund assets grow 20% in Asia, while in Europe they suffered a 7% outflow, according to eVestment. Asia hedge fund AUM also grew faster than elsewhere.
FoHF assets leap in Asia, stumble in Europe

Asia-based hedge funds are gaining popularity quicker than those located elsewhere, and flows into funds of hedge funds were notably strong in the second half of 2013, according to eVestment’s latest global survey of fund administrators.

Hedge fund asset growth by location of operations was twice as fast in Asia Pacific excluding Australia/New Zealand (by 13.5% to $42 billion) as in Europe (6.8% to $716 billion) or the US (6.4% to $2.16 trillion) in the period. Admittedly, this was from a far lower base in Asia.

Asia-Pacific funds of hedge funds recorded particularly strong inflows of 20.19% to $17.35 billion, as against a rise of 5.86% in the US and a 6.94% drop in Europe.

The 41 firms surveyed administered a total of $3.8 trillion in hedge assets as at end-2013, up 10.78% from $3.4 trillion on June 30. Thirty-six firms administered $930.1 billion in FoHF assets as at the end of last year, a rise of 2.64% from the end of the first half.

Globally, administrators said they thought hedge funds would be the fastest growing asset class in 2014, followed by private equity and real estate.

In terms of individual strategies, global flows into equity hedge picked up in the second half, at $29.3 billion, after such funds were “largely ignored” during the first half and in 2012, notes eVestment.

This year, fund administrators expect equity long/short to be the fastest growing hedge strategy globally, followed by event-driven, credit and multi-strategy.

Reflecting the widespread preference for equities over fixed income in the past year or so, credit strategies took in $21.6 billion in the second half. While this is a substantial absolute number, it was the poorest net flow figure into credit funds since the first half of 2012.

Despite this recent downwards trend, the size of the credit strategy universe should ensure it remains among the top allocation targets, says eVestment.

The five biggest hedge fund administrators were State Street ($708 billion in AUA), Citco ($576 billion), BNY Mellon ($465 billion), SS&C GlobeOp ($436 billion) and Citi ($298 billion). Together, they administered 65.5% of total industry assets as of end-2013.

Meanwhile, 28 firms provided data on private equity AUA, which stood at $878.6 billion globally as at the end of last year. State Street, Citi and Deutsche Bank were the top three administrators of Asia-Pacific PE assets, with $27.4 billion, $17.2 billion and $11.6 billion, respectively.

In total, alternative AUA rose 6.23% in the second half to $6.4 trillion.

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