Want to be notified when a new article is posted? Entere your email here.

Thursday, June 02, 2005

Hedge Fund Statistics (from Seeking Alpha)

David Jackson at Seeking Alpha provides some interesting statistics on hedge funds (it's from this recent Barron's article, which is (unfortunately) paid subscription only). They come from the Hennessee Group's annual survey of hedge fund managers. Among the more interesting facts:
  • Hedge fund assets were up 27% (year over year), vs 34% in the prior year
  • 28% of hedge fund capital was from funds of funds
  • 33% of hedge fund managers said they turned over their portfolios between 2 and 5 times , and 25% had a turnover of more than 5x (the "turned over more than 5x" percentage was up from 20% the previous year)
  • Most funds still charge a 20% performance fee, but there was a slight increase in management fees (it appears that relatively more funds charged management fees of 1.5% rather than 1%).
He makes a good point that hedge fund abnormal returns (alpha) will be harder to maintain as these funds gain more and more assets.

It's also interesting to note that turnover on these funds has increased, making hedge funds less tax efficient. How much of an impact this will have for the typical hedge fund holder is not clear: if the investor is an institution or qualified plan, not at all. If not, my guess is that it still won't make too much difference. My guess (totally unbacked by data) is that hedge fund investors are focused on the either the chance of high returns or the low correlations between hedge funds and other asset classes.

No comments: