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2008 Was Lean for New Hedge Funds

Date: Friday, February 6, 2009
Author: Deal Book Blogs NYTimes.com

Raising money to start any new venture was tough last year, but especially so if you were a hedge fund.

Assets for new hedge funds declined 35 percent in 2008 compared to the previous year, as hedge fund investors typically institutional investors and wealthy individuals hung back from this asset class, according to a survey published in the February issue of Absolute Return magazine.

The largest new funds in the United States last year amassed a combined $23.2 billion in assets under management, according to a summary of the survey results provided to DealBook.

That contrasts with the $31.5 billion for the largest new funds in 2007, and $31 billion in 2006.

The study found that only 35 new funds began with more than $50 million in the first half of last year, totaling a combined $19.5 billion. That number is skewed, however, as nearly half the amount, $8.1 billion, came from two new funds introduced by Goldman Sachs.

Only six funds managed to raise more than $1 billion, compared to eight in 2007.

The lucky few included Appaloosa Managements Thoroughbred fund, with $1.9 billion; Lone Pine Capitals Lone Dragon emerging markets fund, with $1.8 billion; and Highliner Investment Groups $1 billion market-neutral equity Alyeska fund.