Hedge fund assets top $2trn but still below pre-crunch peak

The hedge fund industry has tipped $2trn assets partly on the back of 13% inflows last year, with managers running more than $1bn still holding the vast majority of this money, according to research published today.

Database HedgeFund Intelligence says hedge funds including Ucits variants ran $2.1trn at the end of 2010, up from $1.8trn a year earlier.

The total industry assets have not been so large since 2006.

They still sit below the peak of $2.6trn in 2007, just before the credit crisis, but they are comfortably above the $1.4trn at the height of it in December 2008.

Allocators last year continued the preference they showed in 2009 for large firms managing at least $1bn.

Neil Wilson, managing editor of HedgeFund Intelligence, said: “The hedge fund industry is growing again although the lion’s share of growth is being captured by the biggest brand names.”

Groups with at least $1bn under management now hold 84% of all hedge fund assets. There are 220 such firms in the US, 128 in New York alone. London has 63, while Australasia including Japan has 29.

The steepest growth in large managers has been in Hong Kong, which had 11 by the end of 2010, up from six a year earlier.

Rob Mirsky, head of hedge funds at KPMG, said Hong Kong could be the big winner from the swathe of regulations now facing European managers.

“If I am highly mobile and can trade wherever I want, and am not a US citizen tied by tax, then I can move to Hong Kong quite happily. If rules make it difficult for me to trade here, I may ultimately move my business. Hong Kong, for example, could be a winner from all this,” he said.

Of the industry’s $2.1trn, 68% ($1.4trn) was run from the US; 20.1% ($423bn) in Europe including the UK; 7.3% ($153bn) in Asia and 3.4% ($72bn) from elsewhere.

David Walker

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