Hedge fund assets are currently at their highest levels since 1990. As of June 30, total investor assets were $2.9 trillion, $632 billion (21%) of which was held in funds of funds.
Hedge fund universe
Despite historic highs in asset levels, both hedge funds and funds of funds have had a difficult time keeping pace with the broader public markets in terms of both risk and return. Over the trailing three-year period the HFRI Fund Weighed Composite index and the HFRI Fund of Funds Composite index trailed the S&P 500 by 6.3% and 7.3%, respectively, and 8.6% and 9.4%, over the trailing five-year period, respectively. Looking at risk over the same periods, both HFRI indexes showed greater volatility than the equity index.