The global investment fund industry boasts over US$85 trillion in assets under management (AUM), according to new data from the International Organization of Securities Commissions (IOSCO) — which highlights hedge funds’ higher risk exposures compared with traditional investment funds.
The umbrella group of global regulators issued the fourth edition of its annual report documenting the global fund industry — including hedge funds, and open- and closed-end investment funds — based on regulatory data collected from its members from the end of 2024.
The report “is the only publicly available dashboard to aggregate both public and private investment fund types on a global level,” IOSCO said. It added that it provides an aggregate overview of the size, composition and risk characteristics of the global fund industry.
“Overall, the data indicates continued growth in aggregate NAV across major fund types in 2024, alongside relatively stable risk profiles,” the regulators reported.
Among other things, the report said that hedge funds continue to have higher leverage and to make greater use of derivatives compared to other fund types.
Aggregate leverage and borrowing by hedge funds increased during the year, but “remain below earlier peaks,” the report said. Hedge funds’ liquidity indicators also suggest that, on average, they “are well positioned to meet investor redemptions under normal market conditions.”
At the same time, the regulators said that the data also reveals that hedge fund activity is concentrated within a small number of jurisdictions and strategies, and that these funds are highly exposed to bilateral derivatives transactions.
“These features underscore the importance of ongoing monitoring of leverage, liquidity, and counterparty exposures within the [hedge fund] sector,” the report said.
As for the mainstream fund sector, the data showed that open-ended funds “remain primarily exposed to traditional asset classes, with low leverage and limited borrowing,” compared to hedge funds and closed-end funds.
Closed-end funds “continue to focus on private equity, real estate and other alternative strategies with longer investment horizons,” it said — adding that derivatives usage and counterparty exposures for both open- and closed-end funds remains relatively modest.
IOSCO estimates that its collected data — which covers US$72.6 trillion in AUM across 128,389 funds — represents about 85% of the total global fund industry, an estimate that it calculates based on additional independent data sources on the size of the global hedge fund industry and the open-ended fund sector. The latest edition of the report also includes data from three new reporting jurisdictions.
“This fourth edition of the [report] covers more jurisdictions than ever before,” said Jean-Paul Servais, chair of IOSCO’s board, in a release.
“One of a kind, it provides a consistent, high-level overview of the global investment funds industry, with a particular focus on leverage, liquidity risk and counterparty risk, to inform investors and interested stakeholders. Its associated dashboard facilitates the visualization of data and sheds light on meaningful trends,” he added.