ALTERNATIVES

Activist hedge fund assets increase 269% over last 5 years — AIMA paper

Assets managed by activist hedge funds increased 269% to about $120 billion in the five years ended Dec. 31, said estimates from Hedge Fund Research, in a new paper released Tuesday by the Alternative Investment Management Association.

Over the 13-year period from Dec. 31, 2001, when activist hedge funds managed a total of just $2.7 billion, to year-end 2014, assets managed by this specialist industry subset rose 4,344%.

Despite recent growth, by assets under management, activist hedge fund managers represented about 4% of the industry’s $2.8 trillion of total assets as of Dec. 31, HFR data showed.

The paper, “Unlocking value: the role of activist alternative investment managers,” relied on data from HFR and a wide variety of other industry and academic sources, collected by AIMA and law firm Simmons & Simmons.

A primary driver of the activist hedge fund niche’s long, healthy growth spurt has been performance, the paper’s authors said.

HFR data showed that in periods ended Dec. 31, over one year, the HFRI ED: Activist index returned 5.2%, compared to a 3% return for the much broader hedge fund industry proxy, the HFRI Fund Weighted Composite index. Annualized returns for the three- and five-year periods ended Dec. 31 were 13.9% and 7.8%, respectively, compared to 6.1% and 4.5% for the broader index over the same periods.

The full paper is available by e-mailing Dominic Tonner, an AIMA spokesman, at dtonner@aima.org.