The Alternative Investment Management Association (AIMA), PwC and Elwood have estimated that the total assets under management (AuM) of crypto hedge funds increased to nearly $ 3.8 billion in 2020, from $ 2 billion the last year.
The findings come from the Third Annual Global Crypto Hedge Fund Report, which is based on first quarter 2021 research data on crypto hedge funds.
The report identifies that crypto hedge funds on average generated 128% in 2020, up from a 30% increase in 2019.
Average AuM for funds surveyed this year increased from $ 12.8 million to $ 42.8 million, while median AuM increased from $ 3.8 million to $ 15 million.
Other key findings from the report show that most crypto hedge funds trade Bitcoin (92%), followed by ETH (67%), LTC (34%), LINK (30%), DOT (28%) and AAVE (27 percent).
Elsewhere, it was found that the best median performance strategy in 2020 was discretionary long only followed by discretionary long-short, multi-strat and quant.
Regarding crypto investments, the report cites that about a fifth of traditional hedge funds surveyed and representative currently invest in digital assets (21%).
Meanwhile, the average percentage of their total AuM hedge funds invested in digital assets is 3%, and 86% of those traditional hedge funds that currently invest in digital assets intend to deploy more capital in asset class by the end of 2021.
According to the report, around a quarter of traditional hedge funds that do not yet invest in digital assets confirmed that they are at an advanced stage of investing this year or are looking to invest (26%).
Jack Inglis, CEO of AIMA, comments: “From the results of this report, it is evident that hedge fund allocations to digital assets continue to gain traction. Diversification and exposure to a new ecosystem of value creation are cited as key drivers for investing in digital assets. “
Inglis explains: “This is not surprising given that hedge funds tend to be early adopters, at the forefront of innovation while remaining committed to achieving the best possible performance.”
“Further education, clarity of regulation and the evolution of service providers and associated market infrastructures could lead to an acceleration of increased investments and greater institutionalization of the industry,” adds Inglis.