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 Management’s Thoroughbred fund, with $1.9 billion; Lone Pine Capital’s Lone Dragon emerging markets fund, with $1.8 billion; and Highliner Investment Group’s $1 billion market-neutral equity Alyeska fund.