Small and Mid-Cap Equity HF Managers Receive Heavy Flows

Based on an article and data from

The Top 50 Small-Cap and Mid-Cap (SMID) focused hedge funds have seen their equity assets jump by nearly $7 billion, or 18.8%, since the beginning of the 2012. According to the most recent ranking, the top SMID Hedge Funds now oversee more than $37 billion in U.S. Equities.

The Top 50 SMID list is led by Oxford Asset Management of the U.K., Alpine Associates of New Jersey, and Kayne Anderson Capital Advisors of Los Angeles. Oxford Asset Management, which employs a quantitative focused investment style, has more than 65% of its US equity assets invested in small-cap and mid-cap companies. Multi-Strategy focused Kayne Anderson Capital oversees more than $1,350 million in SMID assets, while Arbitrage focused Alpine Associates oversees more than $1,561 million.

To be eligible for the top 50 SMID Hedge Fund List, a fund must have more than 50% of its equity assets invested in small-cap and mid-cap companies. Notably, twenty-six hedge funds on the list have greater than 75% of their assets dedicated to the SMID stocks.

The tenth largest SMID hedge fund, AWM Investment Company, is the purest small-cap fund on the list. The New York-based Deep Value focused hedge fund, which is led by 71 year-old Austin Marxe, has more than 99% of its assets invested in small-cap equities.

To put the flows into some kind of perspective last year the largest 100 hedge funds as a group had net inflows of only $20bn, and European based hedge funds have lost over 25% of their assets over the last year or so, and as recently as May European hedge funds lost 7% of their assets (or about $25bn in assets).

It could be that the avoidance of Euro-denominated assets has helped flows to Japanese equity specialists last year, and that this year the American institutions that dominate flows are staying with domestic managers, but diversifying away from large cap managers at the margin. Given the liquidity and size of the SMID hedge funds that could be as much as some of the managers could cope with for now.


Ranking Methodology: The top 50 SMID Hedge Fund rankings are compiled on a quarterly basis using hedge fund firms’ overall U.S. equity assets under management. The SMID list includes the top hedge funds with that have more than 50% of their U.S. equity assets invested in small- and mid-cap companies. Mid-Cap equities includes U.S. listed stocks with market capitalizations between $2 billion and $10 billion, while Small-Cap equities includes U.S. listed stocks with market capitalizations less than $2 billion.