Watchful eye: Revenue will rise, but increased regulation may harm profit margins

Consistent growth in industry assets under management (AUM) has benefited the Hedge Funds industry immensely during the five-year period to 2017. The AUM of industry operators increased during the period as a result of growing satisfaction from many institutional investors. Consequently, industry revenue is anticipated to increase. However, though industry professionals question the relevance of benchmarking hedge fund returns against equity performance, given that hedge funds rely on a range of instruments other than stocks, the industry's poor performance relative to the S&P 500 has begun to raise concern from some investors...purchase to read more.

Industry Statistics & Market Size
Annual Growth 12-17
Forecast Growth 17-22
Market Share of Companies

Industry Threats & Opportunities

  • Increased regulation and an escalating focus on the industry’s tax structure have the potential to harm profit
  • Investors are now pushing for even lower fees and increased transparency on fund investments
  • Hedge funds are expected to return to growth as they successfully navigate the volatile global economy
  • Industry Report - Industry Products Chapter

    Generally structured as private investment partnerships, hedge funds raise capital from a limited number of very large and sophisticated investors. Hedge funds then invest this capital in a range of securities using various investment strategies. On average, hedge funds generate revenue from a 1.4% fee on total assets under management (AUM) and a 17.0% share in investment profit. Because revenue is correlated with AUM, the following services are ranked by estimated AUM of the hedge funds that specialize in these investment strategies. Multi-strategy hedge funds engage in a variety of investment strategies to diversify holdings and mitigate downturns in one or more markets. Other strategies include option strategies, mutual fund timing and statistical arbitrage offerings, among others...purchase to read more.

    Additional Insights for the Hedge Funds Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Hedge Funds Industry are

  • Having a good reputation
  • Must comply with government regulations
  • Having a high prior success rate (including completed prior contracts)
  • IBISWorld analysts also discuss how external factors such as Demand from retirement and pension plans and S&P 500 in the Hedge Funds industry impact industry performance..

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    What's in this report

    What is the Hedge Funds Industry?

    Companies in this industry pool investments, securities or other assets on behalf of shareholders, unit holders or other beneficiaries. This industry comprises hedge funds but does not include mutual funds, real estate investment trusts or exchange-traded funds. Additionally, funds in this industry are considered establishments, while fund managers are considered enterprises.

    Industry Products
  • Equity focus
  • Fixed income focus
  • Emerging markets
  • Event-driven
  • Multi-strategy
  • Macro
  • Distressed securities
  • Industry Activities
  • Offering equity long bias, equity long-only, equity long/short and equity market neutral funds
  • Offering fixed income funds
  • Offering emerging market funds
  • Offering event-driven funds
  • Offering multi-strategy funds
  • Offering macro funds
  • Offering distressed securities funds
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Demand from retirement and pension plans
  • S&P 500
  • Investor uncertainty
  • Access to credit
  • Regulation

  • Current Performance
  • Historical performance
  • Recent developments
  • Regulation and compliance costs
  • Chart: Revenue Growth

  • Industry Outlook
  • Mitigating risk
  • Legislation introduction
  • Table: Hedge Funds Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Hedge Funds Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Portfolio Management
  • Retirement & Pension Plans
  • Private Equity, Hedge Funds & Investment Vehicles
  • Consumers

  • Key Selling Industries
  • Investment Banking & Securities Dealing
  • IT Consulting
  • Software Publishing
  • Stock & Commodity Exchanges

  • Products & Services
  • Equity focus
  • Fixed income focus
  • Other
  • Multi-strategy
  • Emerging markets
  • Macro
  • Event-driven
  • Distressed securities
  • Chart: Hedge Funds Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Pension funds
  • Other
  • Wealth managers
  • Insurance companies
  • Sovereign wealth funds
  • Endowments and foundations
  • Fund of funds
  • Banks
  • Chart: Major Market Segmentation for the Hedge Funds Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitWagesCompliance costs and other expenses
  • Chart: Cost Structure Benchmarking – Sector vs Hedge Funds

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Hedge Funds Industry

  • Industry Globalization
    Bridgewater Associates LP,
  • Table: Bridgewater Associates LP - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Hedge Funds Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Hedge Funds Industry
  • Industry Revenue (2008-2022)
  • Industry Gross Product (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • S&P 500 Index (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    2.0 And 20.0
  • The industry's traditional fee structure that refers to a flat 2.0% fee of total assets under management and a right to 20.0% of any profit earned.
  • Assets Under Management (Aum)
  • The value of the assets that a hedge fund manages on behalf of clients.
  • Distressed Debt
  • The debt of companies that have filed or are likely to file for bankruptcy.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s industry research report on Hedge Funds can be used to help you understand the industry’s market size, growth potential and major companies. Five-year forecasts provide insight into the industry’s prospects, so you can make decisions with confidence. This information is perfectly suited to informing your business plans, pitch books, benchmarking and SWOT analysis.

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    This report on Hedge Funds:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Hedge Funds market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Hedge Funds, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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