PREQIN SPECIAL REPORT: FUNDS IN THE US

JULY 2018 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US FOREWORD

he US is home to more managers, and capital than any other region in the world: 72% of total hedge fund Tindustry assets are overseen by managers based in the US. When we published our last report on ‘Hedge Funds in the US’ in 2016, the industry was facing a challenging fundraising and performance environment. However, over the past 18 months the environment for hedge funds has significantly improved. In 2017, hedge funds in the US achieved a “perfect 12”: 12 consecutive months of positive performance. Preqin’s recent survey of over 360 hedge fund managers revealed that 64% of North America-based managers recorded growth in (AUM) over 2017, with the total size of the US hedge fund industry amounting to $2.63tn as at November 2017.

All 50 US states contain at least one institutional actively seeking to invest in hedge funds, and North Dakota and West Virginia are the only states without any hedge fund managers. Using the profiles of over 3,400 institutional investors and 3,300 hedge fund managers on Preqin’s online platform, this report examines the current state of the hedge fund industry in the US, and takes a closer look at the 10 leading states for hedge fund activity. There are vastly different hedge fund industries from state to state within the US: from New York, home to over half of those managers with $1bn or more in AUM; to Connecticut, which has the largest hedge fund manager in the world; and Texas, home of the largest single allocator to hedge funds in the US. Preqin Special Report: Hedge Funds in the US gives a detailed analysis of this centre of the worldwide hedge fund industry.

We hope you find this report useful, and welcome any feedback you may have. For more information about Preqin and our services, please visit www.preqin.com or contact [email protected].

p3 Hedge Funds in the US p5 New York p6 Connecticut p7 California p8 Massachusetts p9 Illinois p10 Texas p11 New Jersey p12 Florida p13 Pennsylvania p14 Virginia p15 Other States

All rights reserved. The entire contents of Preqin Special Report: Hedge Funds in the US, July 2018 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Special Report: Hedge Funds in the US, July 2018 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Special Report: Hedge Funds in the US, July 2018. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Special Report: Hedge Funds in the US, July 2018 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Special Report: Hedge Funds in the US, July 2018 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

2 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 HEDGE FUNDS IN THE US

Fig. 1: Active US-Based Hedge Fund Managers and Institutional Investors by State

72 16 WA 37 NH 14 239 1 MA 3 4 ME 182 MT ND 8 3 1 0 63 VT 29 MN 2 22 37 OR 5 RI 12 591 3 ID 6 31 93 NY 3 SD WI 1,284 15 MI 4 1 12 105 WY 6 158 CT 22 52 104 PA 211 11 IA 87 10 NE 2 IN OH NV 4 10 30 14 13 77 196 NJ UT 72 IL 8 87 146 362 18 CO 190 WV 65 16 0 VA CA KS 62 15 45 537 11 KY 15 MO 6 61 11 NC DE 35 8 23 18 13 50 OK 23 AZ 13 7 AR TN SC 83 16 NM 4 32 7 MD 1 39 7 70 MS GA 3 44 55 170 18 DC 32 9 TX LA AL 231 7 6 9 AK 140 1 FL 163

10 HI 3 No. of Institutional Investors No. of Hedge Fund Managers

he US remains a key driver of the Fig. 2: Capital Invested in Hedge Funds by US-Based Institutional Investors by Type Thedge fund industry across the globe, (Excluding Funds of Hedge Funds) accounting for 72% of the approximate 1,400 2.8 $3.6tn in global assets as at 31 May 2018. 2.5 Size of US Hedge Fund 1,200 2.3 Despite hedge fund activity in other Industry ($tn) 1,000 2.0 regions globally expanding alongside that 1.8 800 of the US, the country accounts for 3,405 1.5 600 1.3 of the 5,523 institutional investors active in 1.0 hedge funds and 3,319 of the 5,383 active Funds ($bn) 400 0.8 200 0.5 hedge fund managers tracked by Preqin. 0.3 Capital Invested in Hedge 0 0.0 All 50 US states are home to at least one Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 actively investing Public Private Sector Pension Fund in hedge funds, and there are only two Endowment Plan Foundation states that have no hedge fund managers Company operating within them. This report will Asset Manager Wealth Manager examine the states where the largest Other level of hedge fund activity takes place Size of US HF Industry Source: Preqin across the US, based on an assessment of a combination of factors for each state, including the number of fund managers is home to the two largest hedge fund make-up of investors active in hedge funds and investors, capital invested in hedge managers in the world (page 6). and the largest players in the industry. funds and total AUM. New York accounts for just under half of all US hedge fund For each of the top states, we look at the industry assets (page 5); Connecticut size of the local hedge fund industry, the

3 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US

US-BASED HEDGE FUND INVESTORS totalling $310bn. Blackstone Alternative 6% respectively. Single-manager hedge Pension funds are, by some distance, the Asset Management is the largest fund funds account for a significant majority largest aggregate allocator to hedge funds, of hedge funds manager in the US and, (76%) of US-based hedge funds, with contributing almost half of all institutional indeed, the world, currently managing funds of hedge funds, managed futures/ capital invested in the asset class by US- $75bn (as at May 2018). CTAs and liquid alternative structures based institutional investors (Fig. 2). representing 13%, 6% and 3% respectively Over half of US-based funds of hedge US-BASED HEDGE FUND MANAGERS (Fig. 4). funds are based in New York (Fig. 3), Over one-third (36%) of all US-based fund with the aggregate AUM of managers are based in New York, while managers headquartered in the state California and Texas are home to 15% and

Fig. 3: Assets under Management of US-Based Funds of Hedge Funds by Manager Location Fig. 4: US-Based Hedge Funds by Structure

New York 1% 4% 2% Commingled Fund 1%1% Connecticut 3% 2% 6% 2% Illinois 4% Fund of Hedge Funds California 13% 7% Massachusetts Managed Florida Futures/CTA 55% Alternative Mutual 9% Washington D.C. Fund Pennsylvania UCITS Tennessee 13% 76% North Carolina Other

Other States

Source: Preqin Source: Preqin

Fig. 5: Most Active US States in the Hedge Fund Industry

Investors Fund Managers No. of Active Average Current No. of Active FoHF Manager No. of Hedge Industry Size State Institutional Allocation to HF FoHF Managers AUM ($bn) Fund Managers ($bn) Investors (%) New York 591 21.4 147 310 1,284 1,241 Connecticut 105 19.2 26 72 211 390 California 362 16.7 41 41 537 263 Massachusetts 239 16.3 24 24 182 192 Illinois 196 15.8 24 48 190 119 Texas 170 16.4 18 5 231 83 New Jersey 77 17.1 7 1 146 67 Florida 140 13.3 17 14 163 48 Minnesota 63 13.4 1 1 37 35 Georgia 70 16.1 7 2 44 29 Pennsylvania 158 13.4 16 7 87 19 Maryland 83 14.1 3 1 39 18 Virginia 87 18.1 7 5 45 17 Ohio 104 14.0 3 1 30 16 Colorado 72 15.9 8 1 65 11 Missouri 62 12.1 2 0 11 6 North Carolina 61 16.5 10 6 35 6 Washington 70 13.9 11 5 37 5 Wisconsin 31 14.2 0 0 15 4 Tennessee 50 24.8 6 7 32 4

Source: Preqin

4 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 NEW YORK

ew York dominates the US hedge fund industry, representing IN NUMBERS N34% of global industry AUM and 47% of all US-based hedge funds. New York City is home to 92% of all hedge fund managers based in the state. 1,284 Number of active New York-based hedge fund managers. Investors based in New York currently allocate an average of 21.4% of their total assets to hedge funds. This is the largest average allocation among the top 10 states and the fourth highest among all 50 states. $1.24tn Size of the New York hedge fund industry. The combination of the large levels of AUM managed within the state, the large number of investors and the sheer size of their allocations highlights New York’s importance as a centre for the 591 hedge fund industry. Number of New York-based institutional investors active in hedge funds.

253 Number of New York-based hedge fund Fig. 6: New York-Based Hedge Funds by Top-Level Strategy managers with over $1bn in AUM.

Equity Strategies 1% 4% 6% Event Driven Strategies $306mn Average current allocation to hedge funds 7% Credit Strategies of a New York-based institutional investor active in the asset class. 40% Multi-Strategy 10% Relative Value Strategies

Macro Strategies 147.20% 12-month net return to May 2018 of New 14% Managed Futures/CTA York-headquartered Navy Capital Green Fund, the best performing US-based fund. Niche Strategies 19% Alternative Risk Premia

Source: Preqin Fig. 8: Largest New York-Based Institutional Investors by Current Allocation to Hedge Funds Current Allocation to HF Investor Fig. 7: New York-Based Investors Active in Hedge Funds by Type ($mn)

Fund of Hedge Funds Citi Private Bank 7,254 Manager AIG 5,768 1% 5% 3% Foundation New York Common Retirement Fund 5,437 8% 24% Family Office Source: Preqin

Endowment Plan 11% Private Sector Pension Fig. 9: Largest New York-Based Hedge Fund Managers by Assets Fund under Management Wealth Manager Assets under Manager 13% 21% Asset Manager Management ($mn) Renaissance Technologies 58,043 Public Pension Fund 14% J.P. Morgan Asset Management 51,223 Other Two Sigma Investments 35,400

Source: Preqin Source: Preqin

5 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US CONNECTICUT

onnecticut is home to some of the largest hedge funds in the IN NUMBERS Cworld – including Westport-based Bridgewater Associates, the largest hedge fund manager globally – so it is no surprise that the Constitution State houses the second highest level of hedge fund 211 capital after New York. Number of active Connecticut-based hedge fund managers.

Hedge fund managers based in Connecticut outnumber institutional investors investing in hedge funds by a 2:1 ratio. The two largest hedge fund managers based in Connecticut hold 58% $390bn of the total AUM within the state. Size of the Connecticut hedge fund industry.

Connecticut-based institutional investors currently allocate an average of 19.2% of their total AUM to hedge funds. While fund 105 of hedge funds managers are the most numerous investor type Number of Connecticut-based institutional in Connecticut, representing a quarter of the investor pool, investors active in hedge funds. foundations (16%) and public pension funds (15%) also account for sizeable portions of investors in the state (Fig. 11). 1st Westport-based Bridgewater Associates is Fig. 10: Connecticut-Based Hedge Funds by Top-Level Strategy the largest hedge fund manager in the world.

Equity Strategies 3% 6% Credit Strategies 1.47% 6% Average management fee charged by Event Driven Strategies Connecticut-based hedge funds. 6% 38% Multi-Strategy

Managed Futures/CTA 13% 19.2% Relative Value Strategies Average current allocation to hedge funds among Connecticut-based investors (as a % Macro Strategies of total assets).

13% Niche Strategies 14% Alternative Risk Premia

Source: Preqin Fig. 12: Largest Connecticut-Based Institutional Investors by Current Allocation to Hedge Funds Fig. 11: Connecticut-Based Investors Active in Hedge Funds by Current Allocation to HF Investor Type ($mn) Fund of Hedge Funds Endowment 6,015 Manager Foundation United Technologies Pension Fund 3,483 4% 3% 8% General Electric Pension Trust 3,464 25% Public Pension Fund Source: Preqin 8% Family Office

Endowment Plan Fig. 13: Largest Connecticut-Based Hedge Fund Managers by 10% Private Sector Pension Assets under Management Fund Assets under 16% Manager Wealth Manager Management ($mn) 11% Bridgewater Associates 162,981 Insurance Company 15% AQR Capital Management 119,000 Asset Manager Viking Global Investors 25,100

Source: Preqin Source: Preqin

6 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 CALIFORNIA

ith $263bn in combined assets, California boasts the third IN NUMBERS Wlargest hedge fund industry in the US. Of the 537 hedge fund managers located in the Golden State, 173 of them are found in San Francisco, the city with the highest density of fund 537 managers in the state. Number of active California-based hedge fund managers.

Over half (62%) of all California-based investors currently operate with less than $1bn in AUM, while the majority (82%) of fund managers based in the state also manage less than $1bn in assets. $263bn Size of the California hedge fund industry. California is home to the manager of the oldest active hedge fund in the US, Cypress Partners Master Fund L.P., which is managed by Cypress Partners L.P. and was founded in September 1969. 362 Number of California-based institutional investors active in hedge funds.

18.91% Fig. 14: California-Based Hedge Funds by Top-Level Strategy Average performance fee charged by California-based hedge funds. Equity Strategies 2% 3% 6% Credit Strategies $23.8bn 7% Event Driven Strategies AUM of Farallon Capital Management, the largest California-based hedge fund manager Relative Value Strategies (as at 31 May 2018). 8% 51% Managed Futures/CTA

Multi-Strategy 11% 16.7% Average current allocation to hedge funds Macro Strategies among California-based institutional 12% Niche Strategies investors active in the asset class.

Alternative Risk Premia

Source: Preqin

Fig. 16: Largest California-Based Institutional Investors by Current Allocation to Hedge Funds Fig. 15: California-Based Investors Active in Hedge Funds by Current Allocation to HF Investor Type ($mn) Foundation Regents of the University of California 6,369 Stanford Management Company 5,498 2%3% Wealth Manager 7% CTC myCFO 5,000 Endowment Plan 30% Source: Preqin 9% Fund of Hedge Funds Manager Private Sector Pension Fig. 17: Largest California-Based Hedge Fund Managers by 11% Fund Family Office Assets under Management Assets under Manager Public Pension Fund Management ($mn) 11% 14% Farallon Capital Management 23,800 Asset Manager 13% Symphony Asset Management 19,443 Other PIMCO 18,515

Source: Preqin Source: Preqin

7 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US MASSACHUSETTS

assachusetts currently has 239 institutional investors active IN NUMBERS Min hedge funds – the third highest number of any state in the US. Public pension funds represent the greatest proportion (36%) of the Massachusetts investor universe (Fig. 18), a composition 182 seen in just two other states (Missouri and Nebraska). Number of active Massachusetts-based hedge fund managers.

Of the nine Massachusetts-based fund managers with over $10bn in AUM, all are headquartered in Boston. The city is also home to 68% of all fund managers based in Massachusetts. $192bn Size of the Massachusetts hedge fund industry. The hedge fund industry in Massachusetts is the fourth largest in the US ($192bn) and, on average, managers based in the state offer the lowest performance fees (17.4%) among the 10 featured 239 states. Number of Massachusetts-based institutional investors active in hedge funds. $8.5bn Fig. 18: Massachusetts-Based Hedge Funds by Top-Level Average AUM of Massachusetts-based Strategy institutional investors active in the asset class. Equity Strategies 1% 3% 7% Credit Strategies $3.6mn 7% Relative Value Strategies Average minimum investment set by Massachusetts-based hedge fund managers. Macro Strategies 8% Event Driven Strategies 56% 6.53% 9% Multi-Strategy Three-year annualized net return of Massachusetts-based hedge funds (as at May Managed Futures/CTA 2018). 10% Alternative Risk Premia

Niche Strategies

Source: Preqin Fig. 20: Largest Massachusetts-Based Institutional Investors by Current Allocation to Hedge Funds Fig. 19: Massachusetts-Based Investors Active in Hedge Funds Current Allocation to HF Investor by Type ($mn)

Public Pension Fund Harvard Management Company 7,964 1% Massachusetts Pension Reserves Investment 3% Endowment Plan 7,630 5% Management Board 5% Foundation SCS Financial - Private Client Group 3,473

36% Source: Preqin 8% Fund of Hedge Funds Manager Wealth Manager Fig. 21: Largest Massachusetts-Based Hedge Fund Managers by 10% Family Office Assets under Management Assets under Manager Private Sector Pension Management ($mn) Fund 15% Asset Manager Adage Capital Management 32,428 16% Baupost Group 31,100 Other Wellington Management 15,600

Source: Preqin Source: Preqin

8 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 ILLINOIS

here are 103 managed futures/CTAs based in Illinois, making IN NUMBERS Tup 14% of all vehicles of this kind in the US, second only to New York which is home to 175 vehicles. This high concentration of managed futures/CTAs could be attributed to the fact Illinois 190 is home to the world’s largest derivatives exchange, The Chicago Number of active Illinois-based hedge fund managers. Mercantile Exchange; Chicago is home to 8% of fund managers overseeing CTAs, second only to New York (17%).

Chicago also contains 74% of all active hedge fund managers $119bn based in Illinois, with 140 firms based in the city. New York City Size of the Illinois hedge fund industry. (1,176) and San Francisco (173) are the only cities in the US that are home to more fund managers. 196 Foundations and private sector pension funds each form a Number of Illinois-based institutional significant proportion (21%) of the investors active in Illinois (Fig. investors active in hedge funds. 23). Among these is Boeing Company Pension Fund which invests more than $6.4bn in hedge funds (Fig. 24). CHICAGO 140 Number of hedge fund managers based in Chicago. Fig. 22: Illinois-Based Hedge Funds by Top-Level Strategy

Equity Strategies

3% 3% $357mn 6% Managed Futures/CTA Average current allocation to hedge funds of an Illinois-based insitutional investor active 7% Relative Value Strategies in the asset class. 37% Multi-Strategy 11% Event Driven Strategies 1.65% Credit Strategies Average management fee charged by Illinois- based hedge funds. 11% Niche Strategies

Macro Strategies 22% Alternative Risk Premia

Source: Preqin Fig. 24: Largest Illinois-Based Institutional Investors by Current Allocation to Hedge Funds Current Allocation to HF Investor Fig. 23: Illinois-Based Investors Active in Hedge Funds by Type ($mn) Foundation Boeing Company Pension Fund 6,440 Teachers' Retirement System of the State of 6% Private Sector Pension 6,126 2% Illinois Fund 6% 21% Endowment Plan General Electric Pension Trust 2,470

8% Fund of Hedge Funds Source: Preqin Manager Family Office 8% Fig. 25: Largest Illinois-Based Hedge Fund Managers by Assets Wealth Manager under Management 21% Assets under Public Pension Fund Manager 12% Management ($mn) Citadel Advisors 27,100 Asset Manager 17% Calamos Investments 20,100 Other Magnetar Capital 13,700

Source: Preqin Source: Preqin

9 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US TEXAS

exas is home to only 170 institutional investors in hedge funds. IN NUMBERS THowever, these investors have significant sums dedicated to the industry: on average, investors in the state currently allocate $553mn to hedge funds, the highest level among the 10 featured 231 states. The largest single allocator to hedge funds in the US, Number of active Texas-based hedge fund managers. Teacher Retirement System of Texas, is located in the state, and invests nearly $15bn in hedge funds (Fig. 28).

There are only three Texas-based fund managers with over $10bn $83bn in AUM; combined, these three firms make up 35% of the total Size of the Texas hedge fund industry. AUM within the state. 170 Number of Texas-based institutional investors active in hedge funds. 7th Teacher Retirement System of Texas is the Fig. 26: Texas-Based Hedge Funds by Top-Level Strategy largest allocator to hedge funds in the US and seventh largest in the world. Equity Strategies 6% 1% Credit Strategies 6% $1.2bn Managed Futures/CTA Average target allocation to hedge funds 8% among Texas-based institutional investors Relative Value Strategies active in the asset class.

48% 9% Multi-Strategy Macro Strategies $14bn AUM of Salient Partners, the largest Texas- 11% Event Driven Strategies based hedge fund manager (as at 31 May 2018). Niche Strategies 11% Alternative Risk Premia

Source: Preqin Fig. 28: Largest Texas-Based Institutional Investors by Current Allocation to Hedge Funds Current Allocation to HF Investor Fig. 27: Texas-Based Investors Active in Hedge Funds by Type ($mn) Foundation Teacher Retirement System of Texas 14,804 1% University of Texas Private Sector Pension 11,025 4% Company 11% Fund 24% Endowment Plan Texas County & District Retirement System 6,591

Public Pension Fund Source: Preqin 11% Wealth Manager Fig. 29: Largest Texas-Based Hedge Fund Managers by Assets Family Office under Management 14% 12% Assets under Manager Fund of Hedge Funds Management ($mn) Manager Salient Partners 14,025 Asset Manager 12% 12% HBK Capital Management 10,717 Other Maverick Capital 10,700

Source: Preqin Source: Preqin

10 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 NEW JERSEY

ew Jersey is home to 77 investors active in hedge funds. IN NUMBERS NInvestors in the state currently allocate an average of 17.1% of their assets to hedge funds. 146 Only one New Jersey-based fund manager, Appaloosa Number of active New Jersey-based hedge fund managers. Management, manages over $10bn in assets (Fig. 33); this firm accounts for 23% of AUM across the state as a whole.

New Jersey-based investors have, on average, $25bn under $67bn management, which is the second largest average of any state in Size of the New Jersey hedge fund industry. the US. The largest of these investors is the insurance company Prudential Financial, which holds approximately $1.4tn in AUM. 77 Number of New Jersey-based institutional investors active in hedge funds.

17.1% Fig. 30: New Jersey-Based Hedge Funds by Top-Level Strategy Average current allocation to hedge funds among New Jersey-based investors (as a % of Equity Strategies total assets). 6% 1% Managed Futures/CTA 7% 31% Credit Strategies 19.18% 9% Average performance fee charged by New Event Driven Strategies Jersey-based hedge funds. Relative Value Strategies 11% Multi-Strategy 5.45% Macro Strategies Three-year annualized net return of New 18% Jersey-based hedge funds (as at May 2018). 18% Niche Strategies

Alternative Risk Premia

Source: Preqin

Fig. 32: Largest New Jersey-Based Institutional Investors by Current Allocation to Hedge Funds Fig. 31: New Jersey-Based Investors Active in Hedge Funds by Current Allocation to HF Investor Type ($mn) Private Sector Pension NJ Division of Investment 6,300 Fund 1% Princeton University Investment Company 4% Foundation 5,783 3% (Princo) 23% 9% Wealth Manager Prudential Financial 3,222

Endowment Plan Source: Preqin 9% Family Office Fig. 33: Largest New Jersey-Based Hedge Fund Managers by Fund of Hedge Funds Assets under Management Manager Assets under 13% Manager 22% Public Pension Fund Management ($mn) Appaloosa Management 18,315 Asset Manager 16% Onex Credit Partners 9,677 Other Jacobs Levy Equity Management 7,699

Source: Preqin Source: Preqin

11 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US FLORIDA

ne-hundred and forty institutional investors allocate capital IN NUMBERS Oto hedge funds from within Florida’s borders. The average allocation to hedge funds of these investors is $142mn, the lowest among the 10 featured states, with the largest investor in the 163 Sunshine State, Florida State Board of Administration, currently Number of active Florida-based hedge fund managers. allocating $5.3bn to the asset class (Fig. 36).

The 163 Florida-based fund managers are collectively responsible for $48bn in AUM. The largest fund manager, Bayview Asset $48bn Management, has $13bn in AUM (Fig. 37). Size of the Florida hedge fund industry.

140 Number of Florida-based institutional investors active in hedge funds. $2.4mn Average minimum investment set by Florida- Fig. 34: Florida-Based Hedge Funds by Top-Level Strategy based hedge fund managers.

Equity Strategies 1% 7% Credit Strategies $13bn 7% AUM of Bayview Asset Management, the 31% Multi-Strategy largest Florida-based hedge fund manager (as at 31 May 2018). 8% Managed Futures/CTA Relative Value Strategies 13.4% 13% Macro Strategies Average target allocation to hedge funds among Florida-based institutional investors Event Driven Strategies active in the asset class. 19% Niche Strategies 14% Alternative Risk Premia

Source: Preqin Fig. 36: Largest Florida-Based Institutional Investors by Current Allocation to Hedge Funds Current Allocation to HF Investor Fig. 35: Florida-Based Investors Active in Hedge Funds by Type ($mn) Foundation Florida State Board of Administration 5,328 1% Public Pension Fund Alfred I. duPont Testamentary Trust 1,200 8% 1% Guggenheim Partners Latin America 537 9% 26% Family Office Source: Preqin Fund of Hedge Funds Manager Endowment Plan 11% Fig. 37: Largest Florida-Based Hedge Fund Managers by Assets Private Sector Pension under Management Fund Assets under Manager 17% Wealth Manager Management ($mn) 12% Bayview Asset Management 13,000 Asset Manager 15% Fairholme Capital Management 4,800 Other III Capital Management 4,730

Source: Preqin Source: Preqin

12 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 PENNSYLVANIA

here are 158 Pennsylvania-based institutional investors IN NUMBERS Tallocating capital to hedge funds, almost twice the number (87) of hedge fund managers based in the state. 87 Endowment plans make up a larger proportion of investors in Number of active Pennsylvania-based hedge fund managers. Pennsylvania than in other states – a quarter of all investors in the state invest on behalf of university endowments – followed by foundations (23%, Fig. 39). Investors typically allocate an average of $265mn to the asset class. $19bn Size of the Pennsylvania hedge fund industry. The largest proportion (51%) of Pennsylvania-based funds employ equity strategies, followed by credit strategies (14%) and relative value strategies (10%, Fig. 38). The average management fee 158 charged by Pennsylvania-based fund managers is 1.32%, the Number of Pennsylvania-based institutional second lowest of the 10 featured states. investors active in hedge funds. $7.1bn Fig. 38: Pennsylvania-Based Hedge Funds by Top-Level Strategy AUM of Brandywine Global Investment Management, the largest Pennsylvania-based Equity Strategies hedge fund manager (as at 31 May 2018).

4%1% 4% Credit Strategies 7% Relative Value Strategies $8.0bn Average AUM of Pennsylvania-based 8% Event Driven Strategies institutional investors active in the asset class. 51% Managed Futures/CTA

10% Macro Strategies

Multi-Strategy 4.76% Three-year annualized net return of 14% Niche Strategies Pennsylvania-based hedge funds (as at May 2018). Alternative Risk Premia

Source: Preqin

Fig. 40: Largest Pennsylvania-Based Institutional Investors by Current Allocation to Hedge Funds Fig. 39: Pennsylvania-Based Investors Active in Hedge Funds by Current Allocation to HF Investor Type ($mn) Pennsylvania Public School Employees' Endowment Plan 5,276 Retirement System 1% 4% 4% Foundation Veritable 3,314 7% 25% Private Sector Pension University of Pennsylvania Endowment 2,912 Fund Source: Preqin 8% Fund of Hedge Funds Manager Family Office Fig. 41: Largest Pennsylvania-Based Hedge Fund Managers by Assets under Management 10% Public Pension Fund Assets under Manager Wealth Manager Management ($mn) 23% Brandywine Global Investment Management 7,413 18% Asset Manager Stevens Capital Management 2,015 Other FS Investments 1,780

Source: Preqin Source: Preqin

13 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US VIRGINIA

f the 45 Virginia-based hedge fund managers, the largest is IN NUMBERS OAkre Capital Management, with AUM of $7.9bn (Fig. 45).

Equity strategies are employed by the largest proportion (41%) 45 of funds, while managed futures/CTA vehicles account for 21% of Number of active Virginia-based hedge fund managers. funds in the state (Fig. 42).

There are almost twice as many Virginia-based institutional investors (87) compared to fund managers, and on average, these $17bn investors allocate $415mn to hedge funds. Size of the Virginia hedge fund industry.

87 Number of Virginia-based institutional investors active in hedge funds. 1.33% Average management fee charged by Fig. 42: Virginia-Based Hedge Funds by Top-Level Strategy Virginia-based hedge funds.

Equity Strategies 1% 2% 3% Managed Futures/CTA $415mn Average current allocation to hedge funds 14% Multi-Strategy among Virginia-based insitutional investors active in the asset class. Event Driven Strategies 41% Credit Strategies 53% 18% Macro Strategies Two of the 45 Virginia-based hedge fund managers hold over half of the state’s total Relative Value Strategies AUM between them. Niche Strategies 21% Alternative Risk Premia

Source: Preqin Fig. 44: Largest Virginia-Based Institutional Investors by Current Allocation to Hedge Funds Current Allocation to HF Investor Fig. 43: Virginia-Based Investors Active in Hedge Funds by Type ($mn) Foundation Virginia Retirement System 8,057

1% Investure 3,583 3% Endowment Plan 5% Spider Management Company 1,953 7% Private Sector Pension 31% Fund Source: Preqin Wealth Manager 8% Fund of Hedge Funds Manager Fig. 45: Largest Virginia-Based Hedge Fund Managers by Assets 9% Public Pension Fund under Management Assets under Manager Asset Manager Management ($mn)

14% Akre Capital Management 7,900 22% Family Office EJF Capital 3,200 Other Quantitative Investment Management 3,100

Source: Preqin Source: Preqin

14 © Preqin Ltd. 2018 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/HFUS18 OTHER STATES

he 10 states* featured in this report account for three-fifths IN NUMBERS Tof the total capital invested in hedge funds by US-based investors, as shown in Fig. 46. The largest state outside these 10 featured states is Michigan, which accounts for 5% of aggregate 526 Number of active US-based hedge fund capital committed to the asset class by investors. managers based outside the 10 featured states. Among these is Michigan-based Investment Management Corporation, which is the second largest US-based institutional investor by allocation to hedge funds and the eighth $152bn largest in the world (Fig. 47). In fact, Michigan is home to the Size of the hedge fund industry outside the largest number of investors outside the 10 featured states, with 10 featured states. 93 investors based in the Great Lakes State, more than both New Jersey and Virginia. 1,187 Number of US-based institutional investors The size of Minnesota’s hedge fund industry is larger at $35bn active in hedge funds based outside the 10 than that of both Pennsylvania and Virginia, and almost as large as featured states. both put together. Although two of the largest five fund managers outside the 10 featured states are based in Minnesota, the largest manager, Invesco Asset Management, is located in Georgia, and MICHIGAN 93 currently manages over $14bn in AUM. Michigan is home to the most institutional investors active in hedge funds outside the 10 featured states.

Fig. 46: Proportion of Capital Invested in Hedge Funds by US-

Based Investors by Investor Location (Excluding Funds of Hedge COLORADO Funds) 65 Colorado is home to the most hedge fund 10 Featured States managers outside the 10 featured states.

Michigan 15% Ohio 1% 31% Washington 2% Foundations represent just under a third 2% of US-based institutional investors located 3% Missouri outside the 10 featured states. 3% Maryland 3% Georgia 3% 60% 4% North Carolina $35bn Size of the Minnesota hedge fund industry, 5% Minnesota larger than that of both Pennsylvania ($19bn) Indiana and Virginia ($17bn).

Other

Source: Preqin

Fig. 47: Largest US-Based Institutional Investors outside the 10 Featured States by Current Allocation to Hedge Funds Funds under Current Allocation Fund Type Investor Type Location Management ($mn) to HF ($mn) Preference

General Motors Investment Private Sector Direct, Fund of 77,134 Detroit, Michigan 11,978 Management Corporation Pension Fund Hedge Funds Ohio Public Employees' Retirement Direct, Fund of 101,086 Public Pension Fund Columbus, Ohio 9,200 System Hedge Funds North Carolina Department of State Direct, Fund of 98,264 Public Pension Fund Raleigh, North Carolina 4,861 Treasurer Hedge Funds

Source: Preqin

*The 10 states featured in this report are as follows: New York, Connecticut, California, Massachusetts, Illinois, Texas, New Jersey, Florida, Pennsylvania and Virginia.

15 PREQIN SPECIAL REPORT: HEDGE FUNDS IN THE US

JULY 2018

PREQIN

More than 60,000 alternative assets professionals rely on our global data, tools, insights and intelligence to achieve their objectives:

■■ Investors: asset allocation, manager selection and portfolio management ■■ Fund managers: fundraising, portfolio monitoring and investor relations ■■ Service providers and advisors: business development and in-depth market knowledge ■■ The wider alternative assets industry: insight, understanding and information

New York ■ London ■ ■ San Francisco ■ ■ Manila ■ Guangzhou

[email protected] www.preqin.com