What Happened to Blackstone’s Hedge Fund Solutions Segment?
Total revenue fell
The Blackstone Group’s (BX) Hedge Fund Solutions segment generated total revenue of $167.8 million in 4Q17 compared to $176.4 million in 4Q16, implying a fall of 5% as a result of a fall in interest, dividends, and other revenue.
The segment saw a marginal 1% fall in net management fees from $131.5 million in 4Q16 to $130.3 million in 4Q17.
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The segment’s gross return stood at 1.5% in the BPS Composite in 4Q17, while its net return during the same period was 1.3%. In 2017, its gross return stood at 8.3%, and its net return was 7.3%. The returns in the BPS Composite for both periods reflected the returns in the company’s hedge fund strategies.
Assets under management
The Hedge Fund Solutions segment’s total AUM (assets under management) rose 6% on a YoY (year-over-year) basis in 4Q17. The segment’s 4Q17 AUM stood at $75.1 billion. In 4Q17, the segment saw total AUM inflows of $4.1 billion, while in 2017, these inflows amounted to $12.1 billion.
The Hedge Fund Solutions segment incurred total expenses of $69.1 million in 4Q17 compared to $74.6 million in 4Q16, representing a 7% fall. This fall was mainly the result of a fall in the segment’s performance fee compensation from $9.6 million in 4Q16 to $2.4 million in 4Q17.
Blackstone’s market cap is $41.9 billion. Its peers (XLF) Oaktree Capital Management (OAK), Ares Management (ARES), and Ameriprise Financial (AMP) have market caps of $7.2 billion, $4.9 billion, and $24.7 billion, respectively.