Total assets under management (AUM) of hedge funds surveyed by the International Organization of Securities Commissions (IOSCO) rose 24% to US$3.2 trillion, according to a new report.
The IOSCO report explains the results of the fourth IOSCO hedge fund survey and provides an overview of the hedge fund industry based on data as of Sept. 30, 2016.
The report cannot determine how much of this rise is due to investment performance and net flows, and how much is the result of improved reporting, IOSCO says in its announcement. Since IOSCO began collecting data on the hedge fund industry in 2010, regulatory reporting has improved in certain jurisdictions, the organization says.
Long/short equity is the most widely used investment strategy by hedge funds, according to the report, followed by global macro strategies, and fixed income arbitrage. Hedge fund liquidity is strong enough to meet investor redemption demands under normal market conditions, the report says, and gross leverage of the hedge funds in the survey was seven times their net asset value (NAV), including the notional values of interest rate and foreign exchange derivative contracts.
The Cayman Islands continues to be the domicile of choice for the global hedge fund industry, accounting for more than half (53%) of the global total, as measured by NAV, the report says. The U.S. ranks second at 29%. This distribution is largely unchanged from previous years.