Global hedge fund assets are expected to fall to $1 trillion by midyear, down from $1.4 trillion at the end of 2008 and a peak of $1.868 trillion in 2007.
Global hedge fund assets are expected to fall to $1 trillion by midyear, down from $1.4 trillion at the end of 2008 and a peak of $1.868 trillion in 2007, according to a study released Monday by The Bank of New York Mellon Corp. and Casey Quirk & Associates LLC, a Darien, Conn.-based management consultant group.
Once a rebound begins, however, assets are expected to increase to $2.6 trillion by 2013, with North American pension plans expected to be the single largest source of new capital, followed by British and Northern European institutions, the study found.
The study, based on interviews with more than 150 institutional investors, consultants and hedge funds, found that global high-net-worth investors could account for as much as 60% of new net flows between 2010 and 2013.
Funds of hedge funds are projected to capture nearly 60% of net inflows during that time period, the report said.
Still, the industry faces challenges.
“Investor and regulatory demands for new levels of transparency mean the legacy operating model no longer works,” said Brian Ruane, executive vice president of alternative-investment services at BNY Mellon. “Hedge funds increasingly will turn to independent third parties for middle- and back-office functions such as portfolio accounting and reconciliation, custody of non-collateral assets, pricing and valuation, cash management and counterparty risk mitigation.”
BNY Mellon is a major provider of those services.