Money managed by funds composed of hedge funds is down substantially, but a small group of top firms continue to consolidate market share.
Investors have been pulling assets from investment vehicles that allocate to hedge funds since 2008 when the financial crisis rocked performance and a small group were found to have placed money with Ponzi-schemer Bernie Madoff.
But the general pain has been a boon for the largest players in the space, including Blackstone Alternative Asset Management, UBS' A&Q Hedge Fund Solutions, HSBC Alternative Investments and Goldman Sachs Hedge Fund Strategies.
The combined $539.6 billion managed by the top 50 funds of funds at the start of 2014 is nearly 40 percent below the record $877 billion run in January 2008, according to Alpha's 2014 Fund of Funds 50 ranking. Though cumulative assets rose for the first time since the financial crisis—up $45.6 billion during 2013—53 percent of the additional capital came from growth at the top 10 firms, according to the Institutional Investor hedge fund publication.