The Alternative Investment Management Association (AIMA), PwC, and Elwood have estimated that the total assets under management (AuM) of crypto hedge funds globally increased to nearly $3.8 billion in 2020 from $2 billion in the previous year.
The findings come from the third annual global crypto hedge fund report, which is based on data from research in Q1 2021 on crypto hedge funds.
The report identifies that crypto hedge funds on average returned 128 per cent in 2020 compared to an increase of 30 per cent in 2019.
The average AuM for this year’s surveyed funds increased from $12.8 million to $42.8 million, while the median AuM increased from $3.8 million to $15 million.
Further key findings from the report show that the most crypto hedge funds trade Bitcoin (92 per cent) followed by ETH (67 per cent), LTC (34 per cent ), LINK (30 per cent), DOT (28 per cent) and AAVE (27 per cent).
Elsewhere, it was discovered that the median best performance strategy in 2020 was discretionary long only followed by discretionary long-short, multi-strat and quant.
On investments in crypto, the report cites that around a fifth of traditional hedge funds surveyed representing is currently investing in digital assets (21 per cent).
Meanwhile, the average percentage of their total hedge fund AuM invested in digital assets is 3 per cent, and 86 per cent of those traditional hedge funds currently investing in digital assets intend to deploy more capital into the asset class by the end of 2021.
Around a quarter of traditional hedge funds who are not yet investing in digital assets confirmed that they are in late-stage planning to invest this year or looking to invest (26 per cent), according to the report.
Jack Inglis, CEO of AIMA, comments: “From the findings in this report it’s evident that hedge fund allocations to digital assets continue to gain traction. Diversification and exposure to a new value creation ecosystem are cited as key drivers for investing in digital assets.”
Inglis explains: “This is unsurprising given that hedge funds tend to be early adopters, at the forefront of innovation whilst remaining committed to achieving the best performance possible.”
“Further education, regulatory clarity and the evolution of service providers and related market infrastructure could lead to the acceleration of increased investment and further institutionalisation of the industry,” Inglis adds.
