The global hedge fund industry has more than doubled since the financial crisis, to more than $2.8 trillion in assets worldwide, thanks to huge flows of institutional capital, investment returns and flexible business models, said a new report from Deutsche Bank’s hedge fund capital group.
The growth to $2.85 trillion from $1.41 trillion since the 2008 crisis has been concentrated among the largest hedge fund managers, according to the group’s 2015 Alternative Investment Survey.
Since 2008, assets managed by firms with more than $5 billion in assets under management have grown 141%, while assets of firms with AUM of less than $5 billion have grown 53%.
Respondents to the survey expect the industry to grow another 7% in 2015 to more than $3 trillion, led by 5.22%, or $149 billion, in predicted market gains, and $60 billion in predicted net inflows.
The industry as a whole grew 8% in 2014, led by performance-based gains of 3.33%, or $140 billion, and net inflows of $76 billion.
However, 66% of respondents said their own hedge fund portfolios did not meet their return targets in 2014, while 27% reached their overall target and 7% said they outperformed their targets.
Only 14% of respondents, on the other hand, targeted returns of more than 10%, compared to 37% last year, showing managers are continuing to lower expectations for traditional hedge fund products.
Deutsche Bank’s hedge fund capital group in December surveyed 435 global hedge fund executives who collectively manage $1.8 trillion in assets.