GLOBAL HEDGE FUND ASSETS RISE 27% TO $2.6 TRILLION

 

 

GLOBAL HEDGE FUND ASSETS RISE 27% TO $2.6 TRILLION

 

 

• New York’s lead grows as the world’s biggest hedge fund centre

 

• Global hedge fund assets rose 27% during 2007, despite the impact of the “credit crunch” on investor appetites in the second half of the year

 

• Over 390 firms are now members of the Global Billion Dollar Club
  (each runs over $ 1 billion of assets)

 

 

London, 16 April 2008 – Assets under management in global hedge funds reached $2.65 trillion at the beginning of 2008, according to new research compiled by HedgeFund Intelligence (HFI), publisher of the newsletters and databases of EuroHedge, AsiaHedge, South AfricaHedge and InvestHedge, as well as the U.S.-based magazine Absolute Return.

 

The survey, published today in HFI’s annual Global Review, is based on information from the most comprehensive database of the hedge fund industry. It shows assets up 27% from the figure of $2.079 trillion reported a year ago.

 

The “credit crunch” has impacted investor appetites, and there was undoubtedly a marked slowdown in the industry’s rate of growth during the second half of the year. But according to HFI’s 2007 mid-year Review, industry assets had already grown to $2.48 trillion by last July, so while assets grew by only 6.6% in the second half, overall growth for the year remained impressive.

 

The survey also highlighted the following:

 

·  New asset gathering continued to drive growth

With hedge funds on average returning about 8% to investors, it is clear the majority of the increase in aggregate assets under management last year (more than two-thirds of it) was due to net inflows of new money from investors.

 

·  Top 390 firms manage nearly 80% of assets globally

There are now more than 390 firms around the world in the Global Billion Dollar Club – managing hedge fund assets of $1 billion or more. The combined amount of assets that these firms now manage reached a collective $2.083 trillion by the end of 2007 – or close to 80% of the industry’s global aggregate.

 

·  New York extends its lead as the top centre

255 of the 391 Global Billion Dollar firms are based in the United States, and 144 of them are based in New York, where they manage collective assets of $973 billion. This is up sharply from the total a year ago of 123 firms with $1 billion or more of assets in the Big Apple, with combined assets at that time of just under $650 billion.

 

·  Concentration increases amongst biggest players in Europe

The growth rate of the industry in Europe (at 25%) was roughly in line with the rate of growth globally, with the total assets of European hedge funds up from $460 billion to nearly $575 billion. London continues to be the dominant centre in the European region, with 75 Global Billion Dollar  firms headquartered there now (up from 72 a year ago), and with collective assets up from $261 billion to $348 billion. Just as in the U.S., the biggest firms in Europe are becoming more dominant – with the market share of the top 22 firms (with assets of over $5 billion each) rising from 37% to 44% of European assets during the year.

 

·  Asian centres grow, though outflows continue in Japan

Assets in Asia-Pacific hedge funds rose at a slightly faster rate than the global average – over 30%, from about $148 billion at the start of 2007 to a recently revised figure of $196 billion at the start of 2008. But this overall growth masks contrasting trends within the region, with huge growth in markets like China and India at the same time as significant net outflows last year from funds in Japan. While the importance of Tokyo as a hedge fund centre declined, there was particularly strong growth in both Hong Kong and Singapore, which now have a total of 19 Global Billion Dollar firms between them.

 

·  Funds of funds are still major source of capital

According to the latest research from InvestHedge, which tracks investors in hedge funds, a high proportion of the new money coming into the industry is from institutional investors – and a lot of it via funds of funds. According to its latest statistics, the InvestHedge Billion Dollar Club – which tracks the biggest hedge fund of funds groups – now has 151 member firms with total assets of over $1.1 trillion. When the assets of the other 400-plus smaller fund of fund groups on the InvestHedge database are also taken into account, it is clear that close to 50% of industry assets are being allocated via funds of funds.

 

Commenting on the latest statistics, HedgeFund Intelligence editorial director Neil Wilson said: “The continued growth of global assets during the second half of last year – albeit at a slower pace than before – shows that hedge funds generally did a pretty good job negotiating the first phase of the global credit crunch. Conditions since the start of 2008 have, if anything, been even more difficult, so it remains to be seen whether hedge funds in general can continue to do such a good job.”

 

 

The Global Billion Dollar Club: Where the managers are located (JAN 08)

 

Location	Number of funds	AUM $bn 1 Jan 08	% of total assets
New York, US	144	973.44	46.73
London, UK	75	348.55	16.73
California, US	32	133.91	6.43
Connecticut, US	30	198.04	9.51
Massachusetts, US	11	83.34	4
Texas, US	11	42.67	2.05
Hong Kong	10	15.5	0.74
Singapore	9	16.85	0.81
Sydney, Australia	8	40.13	1.93
Tokyo, Japan	7	10.52	0.5
Paris, France	6	19.77	0.95
New Jersey, US	6	18.2	0.87
Illinois, US	5	36.88	1.77
Stockholm, Sweden	4	12.49	0.6
Wisconsin, US	3	21.01	1.01
Minnesota, US	3	19.1	0.92
Bermuda	3	9.6	0.46
Moscow, Russia	3	4.58	0.22
Georgia, US	2	13.26	0.64
Maryland, US	2	9.98	0.48
Florida, US	2	7.01	0.34
Virginia, US	2	4.79	0.23
Toronto, Canada	2	3.9	0.19
Other	20	39.73	1.91

 

Source: HedgeFund Intelligence