Hedge Fund Management, Performance Fees Fall As Investors Prefer Liquidity

The hedge fund industry continued to grow this year, although the growth came more slowly and unevenly than it has over the last few years. This year the amount of assets under management in the industry hit $2.87 trillion as hedge funds racked up $45.3 billion in net inflows, according to JPMorgan analysts. Assets under management peaked during the second quarter at $2.96 trillion and then retreated slightly in the third quarter.

Hedge fund industry’s growth slowing

JPMorgan’s Capital Introduction Group released their “2015 Hedge Fund Terms Analysis” this week, and they attribute this year’s slowdown in the hedge fund industry’s growth to performance challenges across multiple fund strategies. The group also said investors became more cautious as a result of the struggling energy market, China’s economic slowdown, and the widespread expectation that the Federal Reserve will hike interest rates this week.

Along with the slowdown in growth, JPMorgan also found several key trends in their latest survey, especially pertaining to liquidity. The firm’s analysts surveyed 535 hedge funds across multiple strategies. Here’s a breakdown of the skew by strategy:

Hedge fund fees compress