According to the 2015 Preqin Global Hedge Fund Report, hedge fund industry assets worldwide grew by $355bn to total just under $3.02tn by the end of 2014. Using data from Preqin’s Hedge Fund Analyst, we look at notable changes in the assets under management (AUM) of leading countries worldwide over the course of 2014, and assess what this could mean for the industry going forward.
US-based hedge fund managers currently manage over $2tn in assets, an increase of approximately $261bn from 2013. The US accounts for 71% of all industry assets held worldwide as it continues to assert itself as the established centre of the hedge fund marketplace. Elsewhere, UK industry assets currently stand at $413bn and account for 14% of total industry assets worldwide – down three percentage points from the previous year. Hong Kong, Australia and Singapore are the three largest representatives in the Asia-Pacific region to feature in the top 10 largest countries by AUM.
Indeed, Hong Kong assets have increased significantly over 2014, adding $14bn and now accounting for 2% of total industry assets. Brazil is the only representative from the Rest of World region to appear in the list of top 10 largest countries by AUM. Despite the continued dominance of the US, countries from the Asia-Pacific and Rest of World regions are emerging as prominent locations; their combined assets amount to $212bn, which represents 7% of the hedge fund industry’s total assets.
The most significant change in the top 10 largest countries by AUM is the inclusion of Jersey, which currently lies in third place (behind the US and the UK) with $62bn in AUM. The increase in assets for Jersey-based managers can be attributed to two of Europe’s largest hedge fund managers moving their headquarters to Jersey in recent years. Brevan Howard Asset Management moved from London at the end of 2013, with BlueCrest Capital following suit at the end of 2014.
As outlined in the 2015 Preqin Global Hedge Fund Report, investor sentiment for hedge funds remains strong despite disappointing returns in 2014. Achieving consistent risk-adjusted returns with low volatility and low correlation with equity markets features high on investors’ list of objectives, not simply delivering outsized returns. With this in mind, the indications are that the industry looks set to continue its AUM growth over the coming year.