Summary of 2017Q2 Private Fund Statistics

Summary of 2017Q2 Private Fund Statistics

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ICS Group is a regulatory compliance consulting firm specializing in providing compliance support to the financial services and insurance industries. We help our clients comply with regulatory requirements and industry standards. Our clients include: registered investment advisers, private equity funds, hedge funds, mutual funds, broker-dealers, insurance companies and state pension plans. Our team of highly experienced compliance professionals know from first-hand experience what regulators are looking for, the industry standards that apply, and how to develop and implement cost-effective business-oriented solutions.

Form PF went into effect in 2012 and provides risk exposure statistics including, but not limited to the type and size of assets held by private firms. Since October 2015 the SEC’s Division of Investment Management Analytics Office has published quarterly data and statistics related to private funds as reported on Form ADV and Form PF by SEC-registered investment advisers. Unregistered advisors, exempt reporting advisors and the funds they advise are not included in the data.

The SEC recently published its quarterly statistics for 2017Q2 which includes an expanded set of Private Fund Statistics. The expanded statistics are consistent with the SEC’s objective of providing the public with more transparency into the private fund industry. The types of private funds included in the report include private equity funds, hedge funds, real estate funds, securitized asset funds, liquidity funds, venture funds and other private funds. The data tracks the number of funds, the number of advisors advising each type of private fund, gross and net assets, the number of funds with parallel managed accounts, among other statistics more relevant to large hedge funds.

The data gives a wealth of information on private funds. “We believe publishing these statistics provides the public with more transparency into and understanding of the private funds industry… The additional statistical analyses represent a continued focus on using data to inform policy and provide public information and will continue to facilitate feedback and analysis that could be used by the Commission and others,” said Michael Piwowar, Commissioner at the SEC.

Some of the statistics most relevant to private funds and hedge funds are highlighted below.

Table 1. Number of Funds

The number of private equity funds spiked in the 4th quarter of 2015 and leveled off by the 4th quarter of 2016. At the same time that we saw a spike in private funds in 2015, we also saw a decline in hedge funds. Hedge funds rebounded a bit, but the number has been fairly level for the past 2 years.

Table 2. Number of Advisors Advising Each Fund Type

Similarly, the number of hedge fund advisors has remained relatively flat for the past two years while the number of private equity fund advisors has been gradually increasing. The data tracking the number of advisors advising private equity and hedge funds followed the same trend – a flat line for hedge fund advisors and a gradual increase in private equity advisors.

Table 3. Number of Funds with Parallel Managed Accounts

At the end of 2015 we saw a spike in the number of private equity funds with parallel managed accounts immediately followed by a decline that has continued each quarter since that time. The number of hedge funds with parallel managed accounts has been on a slow decline since 2015.

Table 4. Aggregate Gross Asset Value ($ Billions)

Table 5. Aggregate Net Asset Value ($ Billions)

The gross private equity fund assets and gross hedge fund assets under management have both increased at an approximate annual rate of 11%. Given that the number of private equity and hedge funds have shown no increase over the past 2 years, we can assume that the increase in assets quarter over quarter is attributable to investment returns.