During a tumultuous year through June 30, aggregate assets under management worldwide by hedge fund managers with an institutional orientation fell 3.1% compared to the prior year.
Assets under management in single and multistrategy hedge funds worldwide totaled $1.26 trillion as of June 30, down from $1.3 trillion as of the same date a year earlier, according to an analysis of data from 107 firms for Pensions & Investments' 11th annual hedge fund special report.
In 2019, P&I's universe of hedge fund managers numbered 111.
By comparison, aggregate assets of worldwide hedge fund in the year ended June 30, 2019, were down 2.7% after three prior years of net growth, P&I's historical survey data shows.
Volatile markets and numerous dislocations in sectors around the world since February caused by the COVID-19 pandemic created ideal conditions for many hedge fund managers to produce solid returns in the first half of 2020, hedge fund observers said.
"It's been an interesting year, which tested the true diversification benefits of hedge funds. The fallout from the pandemic created numerous diverse outcomes for hedge fund managers," said Victoria Vodolazschi, New York-based director, investments and hedge fund research at Willis Towers Watson PLC.
"In the first quarter, macro strategies did very well while anything with beta, activist or long-oriented strategies did not," Ms. Vodolazschi said, noting that macro managers "can take advantage of growth and inflation at different speeds across different markets."
Other hedge fund approaches that did well in the first half of 2020 included fixed-income hedge funds that include a broader range of assets including commodities and foreign-exchange instruments as well as systematic trend-following strategies employing shorter-term trading tactics, Ms. Vodolazschi said.
By another survey measure, 47% of hedge fund managers in P&I's 2020 universe reported AUM growth in the year ended June 30 from net flows and investment performance compared to 40% in the prior year.
One-third of survey respondents had lower AUM in 2020 compared to 39% in the previous year, while the AUM of 2% of hedge fund managers was flat compared to 4% of managers a year earlier. Firms new to P&I's annual survey or those without comparative data from the prior year represented 18% of respondents.
Aggregate global AUM of hedge fund managers in both of P&I's 2020 and 2019 rankings was down 1.7% to $1.16 trillion.