December 6, 2021

Assets of Cayman Islands hedge funds up but number of funds down

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By Komfie Manalo, Opalesque Asia:

The number of Cayman-registered hedge funds fell in 2016, according to data from the 2016 Investment Statistical Digest published by the Cayman Islands Monetary Authority (CIMA). However, the value of assets by the industry rose during the same year.

The report showed a 3.2% decline from the 2015 figures as the total number of hedge funds in the Cayman reached 10,586 with assets rising by $17bn in 2015 and $435bn in 2016, reported the Cayman Compass.

CIMA said in the report, “Investors shed risky assets amid continued global growth fears and falling commodity prices. However, this unease was offset by strong labor market data and an increase in interest rates which helped calm concerns about the United States economic recovery leading most assets to rebound from 2016. Improved financial performance is also due to the U.S. stock market growth, the prospect of large-scale deregulation, tax reform and the general pro-business stance of the new U.S. administration.”

It added that the trend in the decline in hedge funds registering in the Cayman Islands began in 2013 when some 11,379 funds were licensed there. According to CIMA, the rise the value of assets under management is due to the strong performance of the hedge fund space and asset appreciation, as well as lower fees including management, administration and performance fees. However, Investment Statistical Digest stated that the Cayman remains “to be a leading jurisdiction within the funds industry.”

Hedge fund launches outnumbers liquidations in 2017

A separate report by data provider Hedge Fund Research showed that for the first time in over two years, the number of hedge fund launches exceeded liquidations on a quarterly basis as improved investor risk tolerance and declining costs drove total hedge funds industry capital to a record $3.16tln in 3Q17.

New fund launches totaled 176 in the quarter, narrowly exceeding the 170 launches recorded in same quarter last year and bringing the year-to-date (YTD) total to 545 funds, according to the latest HFR Market Microstructure Report.

At the same time, the number of liquidations fell sharply in the period to 137, representing a steep and favorable decline over both the prior quarter’s total of 222, as well the 252 liquidations in 3Q16. Year-to-date through September 30, there were 618 liquidations and 545 launches, a substantial narrowing over FY 2016, when 1,057 funds liquidated and 729 were launched.

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IMAGE: Zero Hedge

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