Billion dollar hedge funds rebound through Covid crisis – average gains of 12.1% in 2020
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(30 June 2021) Global Billion Dollar Club (BDC) hedge funds rebound through Covid crisis: BDC assets climb 5% in 2020 as funds profit from pandemic markets
HFM reports that the global hedge fund industry’s performance comeback during last year’s Covid crisis has propelled Billion Dollar Club (BDC) assets to a new high.
- The collective assets of firms managing more than $1bn in hedge fund strategies shrank by 5% to $2.57trn (across 458 firms) in the first half, but rebounded 10% in H2 to $2.83trn (managed by 485 firms). Over 12 months, the BDC grew by 5% in assets and 22 in firm-count. The club now manages two thirds more assets than 10 years ago.
- Hedge funds posted average gains of 12.1% in 2020 after rebounding from widespread historic losses in Q1 as the global pandemic spread, bringing unprecedented lockdowns and triggering the quickest bear market on record.
- Global net asset flows were negative last year and did not contribute to the increase in BDC figures. A net $23.4bn left the hedge fund industry, according to HFM data, as investors switched allocations during the uncertainty.
- Inflows started to return in the second half and have surged so far this year, with global allocations outpacing redemptions by an estimated $67bn, according to latest HFM calculations.
- The BDC mega club of firms managing more than $10bn recorded the biggest growth in the second half, as many industry giants posted standout gains and investors favoured the perceived safety of larger firms.
- The aggregate assets of $10bn-plus BDC firms grew by 13% in H2 to $1.45trn, while $5bn-$10bn firms expanded by 12% in total. The group of firms with between $3bn and $5bn recorded flat growth while the band of $1bn-$3bn firms grew 5% altogether. The smallest band, however, saw asset growth in both halves.
The hedge fund hubs of New York and Hong Kong recorded notable increases in BDC members last year, with New York home to 168 BDC firms, up eight in 2020, and Hong Kong up from 30 to 43.
London suffered a decrease of three firms, from 92 to 89, but remains the second most popular industry hub for leading firms, after New York.
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