Global hedge fund assets rise nearly 7% in the first half of 2011

Thu Oct 6, 2011

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Assets in global hedge funds rose by 6.7% in the first half of 2011, according to the latest research from HedgeFund Intelligence.

  • Assets back over 2006 level, although below 2007 peak
  • Investor inflows continue in spite of turbulent markets
  • New York still the dominant centre, followed by London

Assets in hedge funds of traditional types, which are mostly domiciled offshore or structured as limited partnerships (LPs) in the United States, reached combined assets of $2.158 trillion at the end of June 2011 – up from $2.022 trillion at the end of 2010.

However, there is now almost another $100 billion run in hedge fund strategies that are only available in a European onshore UCITS-compliant format. If these 'standalone’ UCITS strategies are included, the total assets of the industry reached $2.256 trillion at the end of June – a rise of 7.5% from the corresponding figure of $2.099 trillion at the end of 2010, reflecting the faster rate of growth in the UCITS side of the industry.

The latest numbers confirm that, following a sharp contraction in assets of about 30% during and after the crisis of 2007-08, assets in global hedge funds continued to recover during the first half of this year – despite the turbulent markets and flat overall performance by hedge funds in the first six months of the year.

This in turn implies that most if not all of the increase is accounted for by renewed inflows of money from investors, who have been gradually increasing their allocations to the hedge fund sector again in the past couple of years at a time of increasingly high volatility in financial markets.

The latest figures take the industry above the asset levels of 2006 again, but not quite back to the peaks of 2007 – when global hedge fund assets very briefly hit a high of over $2.6 trillion.

Almost all of the recent increase has been accounted for by the bigger firms getting bigger. The elite group of firms that run hedge fund assets of $1 billion or more – the global Billion Dollar Club – grew from combined assets of just over $1.7 trillion at the beginning of the year to almost $1.85 trillion by mid-2011. These top 345 firms now account for about 82% of the industry’s total assets.

As in previous years, the lion’s share of assets continue to be managed in the US, which still accounts for well over $1.5 trillion – close to three-quarters of the total. Among the major markets, the rate of growth in assets was also the fastest during the first half in the US, where it was up by over 7%.

In Europe, industry assets edged up by 4% – from $423 billion to $438 billion (excluding standalone UCITS funds) – during the first half of the year, according to the latest EuroHedge survey. In Asia, assets actually slipped by 5% to $145 billion during the first half, according to the latest AsiaHedge survey, on the back of slightly negative average returns in that region during the period.

New York continues to be the leading centre of the industry by a margin, with London in second place and Connecticut third.

Note: The figures shown here are for single-manager hedge funds only. They do not include or double-count money allocated to hedge funds via funds of funds. Assets in funds of hedge funds are tracked separately by InvestHedge.

ISSN: 2151-1845 / CDC10004H

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