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Research: Large Hedge Funds Have Performed Better Than Small Funds in Down Years

New York (HedgeCo.Net) – Since 1996, during negative performance years, the average large hedge fund experienced less severe losses than the average small hedge fund, according to new research from hedge fund analytics provider PerTrac.

The sixth annual version of its analysis of performance trends for hedge funds of different sizes and ages.

The study, Impact of Size and Age on Hedge Fund Performance: 1996 – 2011, shows that the average large fund outperformed the average small fund in the negative performance years of 2008 and 2011. During the 41 months since 1996 in which hedge funds of all sizes posted negative performance results, the average large fund lost less than the average small fund in 61% of these monthly periods.

The study, which utilizes fifteen leading global hedge databases, including five distinctive dead hedge fund databases to analyze the 2011 hedge fund universe, also shows that the large funds dipped 2.63% on average in 2011, the least when compared to small funds’ 2.78% and mid-size funds’ 2.95% slides. Large funds also maintained lower annualized volatility statistics relative to small funds. The study defines a fund as “small” if its assets under management (AUM) are less than $100 million, “mid-size” if assets are between $100 and $500 million, and “large” if assets managed exceed $500 million.

“The findings suggest that investors interested in exposure to hedge funds and seeking to protect their wealth should examine funds with over $500 million in AUM, since the average large fund has had lower losses in negative performance years and lower annualized deviation figures compared to the average small fund,” said Jed Alpert, Managing Director of Global Marketing at PerTrac.

Alex Akesson
Editor for HedgeCo.net
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