The International Organization of Securities Commissions (IOSCO) has published its third hedge funds survey report (the Survey).
The aim of the Survey is to gather data from hedge fund managers and advisers about the markets in which they operate, their trading activities, leverage, funding and counterparty information. The Survey, which tracks developments in the hedge fund industry between September 2012 and September 2014, highlights the following key findings:
- the Survey suggests that assets under hedge fund management appear to be growing at an impressive pace of 34% since the last Survey. Some of this growth may reflect more widespread and accurate reporting across all jurisdictions, in addition to asset value changes and net inflows, and structural changes such as the consolidation of smaller funds;
- the hedge fund industry is largely concentrated in the US, whilst the Cayman Islands continue to be the tax domicile of choice, boasting a larger number of new funds;
- hedge funds remain mostly US Dollar based and – as of September 2014 – predominantly invested in North American assets. Although the use of multiple strategies is becoming increasingly popular, most of these appear to be equity-based;
- financial leverage is used by hedge funds across all jurisdictions, except in Japan; comparisons of synthetic and gross leverage are only indicative due to different leverage metrics used by the jurisdictions; and
- there does not appear to be a significant liquidity mismatch in hedge funds against the backdrop of the September 2014 “normal” market conditions based on reported data. Hedge funds seem aware of the market liquidity of their portfolio positions, and they generally can make use of suspensions and gating to manage investor redemptions.
View IOSCO Publishes third hedge funds survey report, 11 December 2015