eVestment’s newest report, "Impact of Size and Age on Hedge Fund Performance: 2003 – 2013," finds that age appears to be a greater factor in relative hedge fund performance than size and the hedge fund industry is maturing, with more older funds and larger funds.
This new report is the most comprehensive review of hedge fund returns and trends segmented by age and size of the funds reporting to the eVestment database, offering unique perspectives for investors and fund managers. Some key findings from the report include:
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- The hedge fund industry is maturing and composition is evolving as institutional investors have become the dominant investor.
- The percentage of large funds older than five years is at a peak and new funds are launching larger and growing more quickly. The representation of mid-sized funds under two years old has increased from between 5% to 6% pre-financial crisis, to nearly 20% in 2013.
- While small funds outperformed large funds during the analysis period, the largest portion of this came in specific time bands (2003 & 2008) and from the smallest AUM sub-segments, an indication that replicating these results in practice would have been difficult.
- In the five years since the financial crisis, small funds outperformed their medium and large peers in only two years and trailed both on a cumulative basis.
- Age appears to play a greater factor in relative performance than size. An index created of funds with less than two years of track record (rebalanced annually) outperformed mid-aged (two to five years) and tenured (over five years) funds in each year from 2003 through 2013.
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