Overview of the crypto hedge fund industry landscape: total assets under management last year was US$3.8 billion, with a median return of 128%

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In 2020, the overall asset management scale of global crypto hedge funds has increased by 15 times compared with 2019, and the industry is gradually moving towards “scale” and “institutionalization”.

Written by: PricewaterhouseCoopers, Elwood Asset Management and AIMA
Translation: Siyu

Recently, PricewaterhouseCoopers, investment company Elwood Asset Management and AIMA jointly released the “2021 Global Encrypted Hedge Fund Report”. The following is a translation summary of part of the report.

The report shows that in 2020, the total assets under management of global crypto hedge funds will reach 3.8 billion U.S. dollars, an increase of 1.9 times over the previous year. The average asset management scale is US$42.8 million, and the overall asset management scale has increased by 15 times compared with 2019. In terms of return, the median return of global crypto hedge funds in 2020 is 128%, which is much higher than the 30% in 2019. And the proportion of crypto hedge funds that use independent custodians to custodial assets has dropped from 81% to 76%. In addition, the proportion of at least one independent director on the board of directors has also dropped from 43% to 38%. The industry is gradually moving towards “scale” And “institutionalization.”

The report also mentioned that the launch of crypto hedge funds is highly correlated with the price of Bitcoin. As shown in the figure, four out of five hedge funds were launched between 2017 and 2020.

In terms of investment strategy, as shown in the figure below, the strategies adopted by most hedge funds in 2020 are quantitative strategies, followed by subjective long-short two-way strategies, subjective unilateral multi-strategy and mixed strategies account for a relatively small proportion . In addition, in terms of investment targets, Bitcoin is most favored by institutional investors, with more than 92% of encrypted funds choosing Bitcoin as their investment targets. Ethereum (62%) and Litecoin (34%) ranked second and third in adoption rates, respectively. In addition to these “old” mainstream currencies, LINK (30%), DOT (28%) and AAVE (27%) have relatively high institutional acceptance.

Overview of the crypto hedge fund industry landscape: total assets under management last year was US$3.8 billion, with a median return of 128%

From the perspective of investor types, high-net-worth investors are the most common type of investors among crypto hedge funds, with family offices and fund portfolios ranked second and third.

Overview of the crypto hedge fund industry landscape: total assets under management last year was US$3.8 billion, with a median return of 128%

In terms of investment scale, the top ten crypto hedge funds control 63% of the total assets. At the same time, affected by the bull market, the number of large assets managed by funds is much higher than in 2019.

Overview of the crypto hedge fund industry landscape: total assets under management last year was US$3.8 billion, with a median return of 128%

In terms of costs, the median cost is the same as in 2019, with a management fee of 2% and a performance fee of 20%. The average management fee remains unchanged, but the average performance fee increases.

Overview of the crypto hedge fund industry landscape: total assets under management last year was US$3.8 billion, with a median return of 128%

As supervision becomes more stringent and investors have higher requirements for institutional settings, funds will incur higher costs, but it will also intensify competition among fund managers and bring more types of funds. On the one hand, investors may benefit from increased investment options, but on the other hand, the fund’s profits may also be squeezed due to increased competition. In addition, the report data also shows that currently about 20% of traditional hedge funds have begun to invest in digital assets, but for traditional institutions, regulatory uncertainty is still the main obstacle to entering the encrypted market, and subsequent funding trends will inevitably be affected. This influence.

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