Hedge funds in the sights of regulators |
Date: Monday, May 21, 2007
Author: Reuters
(Reuters) - Hedge funds, the target of German-led calls for tighter
international supervision, have blossomed in recent years as investors seek the
higher returns their riskier, less-regulated investment strategies can generate.
Following are some facts on the industry from a report that the Geneva-based
Financial Stability Forum released on Saturday at the request of the G7
industrialised powers.
The report was released at the end of a meeting in
* Since 1999 hedge fund assets under management have grown more than
five-fold and may now total $1.6 trillion
* The number of funds has steadily grown to more than 9,000.
* Increased inflows from institutional investors, such as pension funds,
have played an important role in the overall growth of the hedge fund industry
* Declining equity prices in 2000-2002 and low nominal yields in fixed-income
markets prompted investors to diversify portfolios using alternative asset
classes
* Continued institutional investor interest and innovations in markets seem
likely to lead to further growth in the size of alternative investments in
years to come
* As the share of institutional investors has risen, that of high net-worth
individuals has declined from 61 percent in 1997 to 40 percent in 2006
* In 2006, the assets of the 100 largest hedge fund firms represented about
65 percent of the industry total, compared with 54 percent in 2003
* The very largest global fund groups now manage $20-$30 billion or more
each
* The rate of growth of hedge fund management has been more rapid in Europe
and Asia than in the
* According to one estimate the share of hedge fund assets managed in
* Hedge fund business accounts for a growing share of the revenue streams of
regulated financial institutions. According to one recent estimate, in 2006
hedge fund business accounted for roughly 15-20 percent of all industry
revenues in investment banking, of which only one fifth related to prime
brokerage
* According to the Bank for International Settlements, bank claims on
non-banks in the
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