PwC: The median return rate of crypto hedge funds last year was 128%
In 2020, the total assets under management of global crypto hedge funds increased 15 times compared to 2019, and the industry is gradually moving towards "scalability" and "institutionalization."This article was published on ChainNews, authored by PwC, Elwood Asset Management, and AIMA, translated by Siyu.
Recently, PwC, investment company Elwood Asset Management, and the Alternative Investment Management Association (AIMA) jointly released the "2021 Global Crypto Hedge Fund Report." Below is a translated summary of some content from the report.
The report shows that the total assets under management of global crypto hedge funds reached $3.8 billion in 2020, an increase of 1.9 times compared to the previous year. The average asset management size was $42.8 million, and the overall asset management scale grew 15 times compared to 2019. In terms of returns, the median return of global crypto hedge funds in 2020 was 128%, far exceeding the 30% of 2019. Additionally, the proportion of crypto hedge funds using independent custodians for asset custody decreased from 81% to 76%, and the proportion of boards with at least one independent director also fell from 43% to 38%, indicating that the industry is gradually moving towards "scalability" and "institutionalization."
The report also mentions that the launch of crypto hedge funds is highly correlated with the price of Bitcoin. As shown in the figure, four-fifths of the hedge funds were launched between 2017 and 2020.
In terms of investment strategies, as shown in the following figure, the majority of hedge funds in 2020 adopted quantitative strategies, followed by subjective long-short strategies, while the proportions of subjective directional long strategies and hybrid strategies were relatively small. Furthermore, regarding investment targets, Bitcoin was the most favored by institutional investors, with over 92% of crypto funds choosing Bitcoin as their investment target. Ethereum (62%) and Litecoin (34%) ranked second and third, respectively. In addition to these "established" mainstream coins, LINK (30%), DOT (28%), and AAVE (27%) also had relatively high institutional acceptance.
From the perspective of investor types, high-net-worth individuals are the most common type of investor in crypto hedge funds, with family offices and fund portfolios ranking second and third.
In terms of investment scale, the top ten crypto hedge funds control 63% of the total asset size. Additionally, influenced by the bull market, the number of funds managing large assets is significantly higher than in 2019.
Regarding fees, the median fees remained the same as in 2019, with a management fee of 2% and a performance fee of 20%. The average management fee remained unchanged, but the average performance fee increased.
As regulations become increasingly stringent and investors demand higher standards from institutions, funds will incur higher costs, but this will also intensify competition among fund managers, leading to a greater variety of funds. On one hand, investors may benefit from an increase in investment choices, but on the other hand, fund profits may be squeezed due to intensified competition. Additionally, the report data indicates that about 20% of traditional hedge funds have begun investing in digital assets, but for traditional institutions, regulatory uncertainty remains the main obstacle to entering the crypto market, and future capital flows will inevitably be influenced by this.
