Lately the biggest funds-of-hedge-funds, including Blackstone Alternative Asset Management, UBS's A&Q Hedge Fund Solutions and Goldman Sachs Hedge Fund Strategies, have been turning to smaller and younger hedge fund talent in search of value-add and outsized returns. Early investments with emerging firms through dedicated seeding funds and direct-investment platforms are transforming the underlying hedge fund universe and helping to promote the next generation of talent the way fund of funds find most attractive. But the fund-of-funds’ commitment to emerging managers is also driving change at home. As their business models morph to meet changing investor interests, the biggest players are increasingly being considered allocators.
This year marks a second consecutive year of inflows into the fund-of-funds industry, according to Alpha’s 2015 Fund of Funds 50 ranking. Total industry assets topped $573 billion for the first since the 2008 financial crisis, though they continue to fall short of the pre-crisis $877 billion peak. While most firms expanded their capital bases over the past year, growth was concentrated at the top. The ten largest fund of funds managed 47 percent of the assets on this year's ranking while 14 of the bottom 20 firms endured outflows. A firm needed to manage $3.085 billion by January 1, 2015 to qualify for the 2015 Fund of Funds 50, down from $3.47 billion last year.
The data for the 2015 Fund of Funds 50 were gathered from questionnaires completed by the fund-of-hedge-fund firms themselves, research in the public record and extensive staff reporting. In some cases, we have included estimates based on our reporting. Only multimanager hedge fund portfolios are included in the capital figures. Assets are stated in millions of dollars and are current as of January 1, 2015 and January 1, 2014, unless otherwise noted. Returns are net of management and performance fees, as of December 31 of the relevant year.
Senior Research Editor Jane B. Kenney compiled this ranking with the assistance of Researcher Valentina McKenzie. Inevitably, we will have overlooked some institutions that belong on our list. If we missed yours, please send an e-mail to FoF50@iimagazine.com to request a questionnaire for the 2016 ranking.