State of the Hedge Fund Industry

1 min

15 Feb 2023

Alex Thompson-Armstrong

Growth in the Hedge Fund Industry is Slowing

Our new research draws on data from Preqin and insights from various hedge fund managers, and reveals that roughly 30,000 hedge funds are currently operating globally. The US dominates the industry with a market share of 65%, followed by the UK (8.8%) and Hong Kong (3.5%).

While the industry is growing, following a record 2,000+ hedge fund launches in both 2020 and 2021, last year witnessed the lowest number of launches since 2010, with ca. 900 new funds.

One possible explanation for this fall is found in the continued rise of large multi strategy funds. These funds are in high demand by institutional investors and have also become an attractive alternative for portfolio managers wanting to strike out on their own.

Daniel Leveau, SigTech’s VP of Investor Solutions

In terms of investment styles, the discretionary approach is still the most commonly applied (53%). However, quantification remains a clear trend, with roughly one third of hedge funds applying a hybrid discretionary and systematic approach. 14% of funds apply a fully systematic approach.

‘Consistent with the consensus belief that macro themes will continue to drive asset prices over the coming years, investment managers we speak to are increasingly adding macro strategies to their funds,’ Leveau continues. ‘In addition, we see an expanding use of quant analytics across most hedge fund strategies.’

Other key findings include:

  • Equity long/short remains the largest hedge fund category (26.9%)
  • With 121 new funds, crypto was the second most popular category for fund launches
  • Delaware, US (36%) and the Cayman Islands (31%) continues to be the preferred legal jurisdiction for hedge funds

Gain further insights into the structure and current trends of the hedge fund industry below.

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