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Long Live Hedge Funds? Not Quite

Date: Wednesday, March 26, 2008
Author: Hedge Fund Daily

Longevity is not one of the hedge fund’s best features. In fact, of the 9,761 hedge funds recorded by Crédit Agricole Structured Asset Management, only 2.45% have been around 15 years or longer, with another 15.25% between eight and 15 years. According to the CASAM Hedge Industry Report for the fourth quarter of 2007, hedge funds between five and seven years old constituted the largest single group at 20.54% of the total. The report found that 10.29% were under a year old, with another 14.37% between one and two years old. In total, 38.6% of all hedge funds were no more than 2 years old. The wide-ranging research also noted:

  • There were twice as many hedge funds last year as there were in 2002 and three times as many as in 2000.
  • Equity long/short represents the single largest strategy, 26.22%, followed by event-driven multi-strategy 11.32%.
  • The primary geographic focus of hedge funds is global (35.3%), followed by North America (25.92%), Asia-Pacific (16.84%) and Western Europe (13.82%).
  • More than one-third (37.12%) of all hedge funds are domiciled in Cayman Islands, with Delaware a distant second (16.56%), followed by the British Virgin Islands (12.74%).
  • The U.S. is home to more than 62% of HF and fund of hedge fund management companies, with nearly half of them in New York. Europe claims 24.43%.
  • The U.S. dollar is the fund currencies of two-thirds of all funds, followed by the euro (19.37%) and the British sterling pound (6.56%).
  • Close to 60% of U.S.-domiciled hedge funds have quarterly redemption periods, with more than 28% offering withdrawal opportunities monthly. Among non-U.S. domiciled hedge funds, monthly redemption is the choice of more than 61% of hedge funds, with nearly 21% offering quarterly.
  • More than half (56.55%) of U.S.-domiciled funds of hedge funds feature quarterly redemption periods with 25% offerings annual ones. Among the non U.S.-domiciled FOHFS, 57.35% had monthly redemption periods, while 35% featured quarterly ones.