Last year’s performance resulted in only a 7 percent drop in the theoretical equity value of the industry, which fell to $239 billion, according to Citigroup. The calculation estimates the amount of capital that would be raised from selling off equity shares in the hedge fund firms.
The value fell at a lesser rate than profits because proceeds from management fees are weighted more highly than those from incentive fees, which tend to be less stable, when valuing of firms.
Hedge funds’ $31.2 billion in 2013 profits accounted for 34 percent of the $93 billion in total asset management industry revenue, according to the report.
The bank’s survey was based on responses from 149 firms with $581 billion, or about 20 percent of industry assets.