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Fund of Hedge Funds Managers in the $1bn Club – Where are They Based? – July 2014

by Ben Pearson

  • 18 Jul 2014
  • HF

According to data taken from Preqin’s Hedge Fund Investor Profiles, fund of hedge funds managers with at least $1bn in assets under management (AUM) currently represent over one fifth (22%) of the total number of fund of hedge funds managers worldwide. Managers belonging to this elite billion dollar club oversee a significant proportion of all capital managed by funds of hedge funds, accounting for aggregate assets under management of $734bn which is equal to approximately 90% of the total assets of the fund of hedge funds industry.

In North America alone these billion dollar firms manage approximately $522bn, or 64% of the total assets under management for all fund of hedge funds managers worldwide, with the average billion dollar manager in the region holding around $5.5bn in AUM. Out of the 155 fund of hedge funds managers worldwide that manage $1bn or more, 95 of them are headquartered in North America. The US is the centre of activity for managers both large and small, so it is no surprise that 61% of the world’s largest managers are headquartered there.

Europe has 54 managers in the $1bn club which are responsible for a total of $196bn in assets under management. This represents an increase in capital managed by the largest Europe-based fund of hedge funds managers from the end of 2013 when those firms with at least $1bn in total assets were responsible for $191bn in AUM. Only 4% of the world’s largest managers are domiciled outside of either North America or Europe; all of these managers are located in the Asia-Pacific region as there are no active fund of hedge funds managers with more than $1bn in assets active in other regions such as Africa, Latin America and the Middle East.

Besides the US and the UK, there are 15 countries that house billion dollar fund of hedge funds managers and they include Jersey, Liechtenstein, Luxembourg, Bermuda and Guernsey. The UK has 21 $1bn fund of hedge funds managers while the US has 71 more $1bn managers than its nearest rival from across the Atlantic. Looking at the distribution of $1bn fund of hedge funds managers by city locations, approximately 60% of these managers operate from headquarters in New York. This is almost double the 31% proportion of London-based managers with at least $1bn in AUM. Geneva, Chicago and Boston respectively figure as the next three most common hubs for fund of hedge funds managers in the $1bn club.

There is no doubt that North America and Europe are the centres of the $1bn club as together they account for aggregate assets under management of $713bn. New York and London naturally follow as the two ‘capital cities’ for the largest fund of hedge funds managers. However, with the hedge fund asset class seeing more inflows from investors worldwide, it may be possible for managers in more emerging regions, including those in Africa and Latin America, to challenge the supremacy of the more established regions by growing their assets and joining the elite ranks of the $1bn club.

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