Crypto Hedge Funds’ Average AUM Grew Three Times in Q1

The average assets under management (AUM) of global cryptocurrency hedge funds increased three-fold in the first quarter of 2019, new research indicates.

Consultancy firm PwC and investment firm Elwood Asset Management jointly published a report on Monday, saying that the median crypto hedge fund AUM has grown to $4.3 million at the end of Q1 2019 as compared to $1.2 million in January 2018.

The growth indicates that funds have been “relatively successful” at raising investments despite bearish market conditions during the period, the firms said.

The report, based on interactions with 100 crypto hedge funds, further highlighted that the average fund AUM was $21.9 million as of Q1 2019 and 60% of funds have less than $10 million in assets while only less than 10 percent are managing assets over $50 million.

Crypto hedge funds also performed better than bitcoin last year, the report found. While bitcoin plunged about 72 percent in 2018, the median crypto hedge fund lost only 46 percent over the same period, “indicating that these managers were successfully able to outperform their benchmark.”

However, performance varied based on the type of strategy adopted. For instance, the median “quantitative” fund returned 8 percent in 2018, while the median “fundamental and discretionary” funds performed negatively, with returns of -53 percent and -63 percent respectively, according to the report.

In a separate statement, PwC Hong Kong director Henri Arslanian, said:

“The crypto hedge fund industry today is probably where the traditional hedge fund industry was in the early 1990s. We expect the industry to go through a rapid period of institutionalisation and implementation of sound practices over the coming years.”

Elwood CEO Bin Ren shared similar view saying that there is “increasing evidence of institutionalisation” in the cryptocurrency space, which is a positive step towards digital assets being recognized as an asset class with “true viability and longevity.”

Another report from Crypto Fund Research last October showed that crypto hedge fund launches are spiking to all-time highs. There were 90 launches in the first three quarters of 2018, and the total was expected to reach as high as 120 for the financial year.

PwC image via Shutterstock