In the first quarter of 2005, Fund of Funds assets jumped 28 percent, from $491.8 billion to $632.3 billion. This increase matches the rapid pace of growth in 2003 and 2004, when assets grew from under $300 billion to nearly $500 billion, the Barclay Group said.
“Although asset growth slowed during the first quarter, the Fund of Funds industry was able to increase market share,” says Sol Waksman, president of The Barclay Group, “It appears that hedge fund investors are now opting for multi-manager approaches rather than single manager funds.”
Outside the Fund of Funds industry, hedge fund growth slowed in Q1. Assets rose just 2.3 percent, from $1,011.9 billion to $1,035.5 billion. During 2003 and 2004, hedge fund assets under management soared from under $400 billion to over $1,000 billion.
A few sectors actually saw assets under management decline in 2005, such as Convertible Arbitrage, which dropped from $66.1 billion to $52.5 billion under management.