09/06/2010 Author: Shannon Hawthorne

FoHF assets drop 2% in six months

The fund of hedge funds (FoHF) sector has suffered a 2% decline in total assets under administration (AuA) over the past six months, as investors increasingly opt to invest directly into the hedge fund sector, the second part of the HFMWeek AuA Survey has revealed.

Total FoHF AuA fell from $1.065trn to $1.038trn between 1 Nov 2009 and 31 Apr 2010, in contrast with single manager assets, which rose markedly during the same period, from $2.4trn to $2.7trn, an increase of 9%.

The survey illustrates that, despite a renewed focus on risk management, FoHFs are still struggling to attract wary investors, while the additional fees involved in FoHF investments are driving a significant number of those still open to allocating to the sector to opt for direct allocations instead.

Of the ten largest administrators, Prime Fund Solutions (formerly Fortis Prime Fund Solutions) emerged as the only firm to have enjoyed an increase in AuA over the past six months, growing from $100bn to $101.75bn, further consolidating its position as a FoHF specialist.

The firm attributes much of the growing interest in its services to the announcement of its acquisition by Credit Suisse. “This is due, in part, to the new paradigm that is developing, whereby large managers want to work with institutional owned administrators,” said Charlie Woolnough, the firm’s European regional director.

However, despite this growth, Citco Fund Services maintained the top spot with total assets of $110bn, a result, in part, of a spate of recent high-profile mandates, according to director William Keunen.