Cerulli estimates rise in global hedge fund assets to nearly $3 trl by 2013
by ICFA editorial 16 July 2009
Global hedge fund assets will return to 2007 levels of $2.9 trillion by 2013 and will grow faster than global mutual fund assets following the financial crisis, according to Cerulli Associates, a Boston-based research company specialising in the financial services industry. Its clients include mutual fund companies, insurance companies, banks and brokerage firms.
It said global hedge fund assets will rise at a compound annual growth rate of approximately 12.1% between 2009 and 2013. The comparable figure for mutual funds is approximately 9%, according to Cerulli Associates. The estimates are based on its forecasts and data from HedgeFund.net.
The recovery in hedge fund assets will be due in part to improvements in governance, increased transparency and better terms for investors such as lower fees, believes Cerulli.
These improvements are coming about as buyers, particularly institutional investors and regulators pressure hedge fund managers to address problems highlighted by the financial crisis. The demand for hedge funds over the medium term is set to come more from institutions, like pension funds, rather than from wealthy private investors, said Cerulli.
Institutions are demanding a better deal and becoming much more discriminating both for investments directly into hedge funds and into funds of hedge funds, the primary distribution channel for the sector, according to the organisation.
Hedge fund and mutual fund firms have been launching hedge fund-like strategies within mutual fund wrappers in the wake of the financial crisis, to address concerns about liquidity and governance. Cerulli said that trend is set to continue.
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