Q2 2013 Hedge Fund Industry Data
In Q2 2013, the hedge fund industry navigated significant rate volatility during the "Taper Tantrum." Despite fixed-income turbulence, Qualifying Hedge Fund net assets grew to $2.085 trillion. The quarter highlighted the resilience of equity-focused strategies while exposing vulnerabilities in highly leveraged macro and fixed-income relative value funds.
Key findings this quarter:
- 1Qualifying Hedge Fund net assets increased to $2.085 trillion despite market volatility.
- 2The "Taper Tantrum" caused acute stress in fixed-income relative value and macro strategies.
- 3Overall leverage remained relatively steady, masking significant rotation under the surface.
- 4Equity strategies outperformed, buoying aggregate industry growth.
Macro Environment
The defining event of Q2 2013 was the "Taper Tantrum." Following comments by Fed Chairman Ben Bernanke in May suggesting a reduction in bond purchases, Treasury yields spiked dramatically. This sudden tightening of financial conditions caused sharp sell-offs in fixed income and emerging markets. Hedge funds with significant duration exposure or emerging market carry trades faced rapid drawdowns, while equity-focused funds managed to weather the storm more effectively.
Regulatory Context
As Form PF reporting completed its first year for the largest advisers, regulators began to utilize the data to monitor systemic vulnerabilities. The sharp rate moves in Q2 provided the first real-world stress test of the new reporting framework, allowing the Financial Stability Oversight Council (FSOC) to analyze how interconnected hedge funds reacted to sudden yield curve shifts.
Future Outlook
Following the Q2 rate shock, hedge funds broadly reassessed their interest rate sensitivities. Heading into the second half of 2013, managers were expected to reduce leverage in crowded fixed-income trades and seek more idiosyncratic, less rate-dependent alpha. The eventual formal tapering of QE remained the key focus.
What moved most this quarter
Qualifying Hedge Funds Net Assets
Significant quarter-over-quarter change based on OFR Form PF data.
Industry Size
Qualifying Hedge Funds Net Assets
Net assets grew to $2.085 trillion.
Leverage
Estimated Gross Notional Exposure
Estimated gross exposure edged up to $12.6 trillion.
Complete Metric Changes
| Metric | Prior Q | Current Q | Change |
|---|---|---|---|
| Qualifying Hedge Funds Net Assets | 2,042 | 2,085 | +2.10% |
| Estimated Gross Notional Exposure | 12,500 | 12,600 | +0.80% |
Frequently Asked Questions
How did the Taper Tantrum affect hedge funds?
The spike in yields caused losses for fixed-income and emerging market strategies, forcing some funds to de-lever quickly, though overall industry NAV still grew.
What was the Q2 2013 NAV for QHF?
Qualifying Hedge Fund net assets increased to $2.085 trillion, up from $2.042 trillion in Q1.
Did leverage decrease in Q2 2013?
While some strategies de-levered rapidly, aggregate gross exposure remained relatively stable as equity strategies expanded.
Methodology & Source Notes
Data is sourced from the definitive OFR Form PF aggregated releases. Comparisons are made quarter-over-quarter. All financial values are estimates based on aggregated filings and subject to reporting lags.
Data Provider: U.S. Office of Financial Research Hedge Fund Monitor. We fetch the latest publicly available aggregated data releases representing SEC Form PF submissions.
Reported values can be subject to revision by the OFR in subsequent quarters. We update historical tables to reflect these revisions where available. This analysis is provided for informational and educational purposes only and does not constitute investment advice.
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Previous Reports
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