Value of hedge fund assets falls by 10%

THE VALUE of assets serviced by hedge fund administrators which have an Irish operation fell by about 10 per cent in the six months to November, as soaring redemption levels and poor trading performances saw the size of the global industry contract by 5 per cent or $142.5 billion.

According to the 11th HFMWeek Hedge Fund Administrators Survey, global hedge fund assets under administration reported negative growth, for the first time in the survey's history, with single-manager assets falling by 5 per cent from $2.9 trillion to $2.7 trillion from April to November of this year.

The survey cited "panicked redemptions, struggling equity markets and global short-selling bans" as leading the decline in industry assets. Funds of hedge funds also fell by 5 per cent on average.

Firms responding to the survey with an Irish operation reported a greater than average decline of 10 per cent among single-manager funds.

As of last December, there was more than $1 trillion in alternative assets serviced from Ireland, with about 4,000 people employed in the sector.

State Street Alternative Investment Solutions Group was one of the few firms with an Irish presence to buck the trend, growing its assets under administration by 25 per cent, while assets at Bank of New York Mellon remained flat at $153.2 billion.

Elsewhere, most firms reported a decline in assets under administration. The world's largest hedge fund administrator, Citco Fund Services, which recently announced 17 redundancies in its Dublin office, saw its global hedge fund assets drop by 6 per cent, down from $482 billion to $455 billion.

Other Irish-based administrators also saw significant declines in their global business, including PNC Global Investment Servicing (-11 per cent); JPMorgan Hedge Fund Services (-19 per cent); and Fortis Prime Fund Solutions (-16 per cent).

Dublin-headquartered Trinity Fund Administrators was one of the worst affected by the current crisis. Its assets fell by 68 per cent, down from $1.38 billion to $0.44 billion.

Although growth in the year to November held up at 3 per cent, industry experts are predicting further falls by the end of the year. William Keunen, director of Citco, said that he expects the value of assets to fall by 25 per cent "peak to trough" by the end of the year.

The "long only" industry is also suffering in the current environment, with latest statistics showing that the net asset value of Irish-domiciled funds fell by 9 per cent, or €74.5 billion, in the year to September. However, the number of funds increased by 4 per cent to 4,987.