Looking back on predictions for a $7 trillion hedge fund industry

By Josh Friedlander

Tue Mar 5, 2013

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Absolute Return also revisits EuroHedge's Paris plans.


One year ago
>> Tandem Global Markets was prepping a credit hedge fund to be managed by Stu Lippman, a former senior portfolio manager on the proprietary trading desk of RBC Capital Markets.

But Lippman (no relation to Greg) decided over the summer to instead sign up at $1.7 billion TIG Advisors. Along with a co-portfolio manager, David Liu, he began trading the TIG Securitized Asset fund in November (see complete performance here).

The fund manages approximately $155 million, according to the Absolute Return new funds survey.

>> The ninth annual EuroHedge Summit, held last spring in Paris, was set to feature recently-knighted Sir Paul Ruddock of Lansdowne Partners and Manny Roman of Man GLG.

The event later added Kyle Bass and numerous other luminaries (full coverage here).

This year's Summit, to be held May 22-23, will feature keynote speakers Chris Hohn of The Children's Investment Fund and Martin Hughes of Toscafund, as well as Jonathan Lourie of Cheyne Capital, a repeat appearance by Sir Ruddock, and many others (speaker list here).

Five years ago
>> Flying cars! Free health care! A $7.44 trillion hedge fund industry!

Upon reflection, most long-dated predictions are embarrassing, and alternatives industry pundits have had their share. Five years ago, Absolute Return listened to some who thought that the hedge fund industry could top $7 trillion by 2013.

"According to this view, a small and rarified group of diversified, $100 billion-plus hedge fund firms will sit atop the new order, managing most of a total asset base that could reach an astonishing $7.44 trillion by 2013. And despite the increased scale of its players, some make a case that the industry could remain lightly regulated," the article speculated.

Unfortunately for the optimists, hedge funds managed about $2.5 trillion at midyear 2012. That's likely to be higher as of this year, which the various HedgeFund Intelligence asset surveys will soon show, but it's not going to be that much higher.

But the argument that the big will get bigger has held true. About $1.85 trillion of that midyear total was managed by 364 firms.

Have we seen $100 billion hedge funds? Not so much. The largest hedge fund in the world, Bridgewater Associates, manages $83.3 billion (and another approximately $60 billion in non-hedge fund assets) . Maybe in another 5 years...