Hedge Fund Assets Rise 30% to $2 Trillion Worldwide By Andrei Postelnicu
March 29 (Bloomberg) -- The world's hedge funds managed more than $2 trillion at the end of 2006, 30 percent more than a year earlier, even as returns trailed stock market indexes, according to a survey.
More than 350 hedge fund managers look after more than $1 billion each, according to HedgeFund Intelligence's first global review of the industry. Europe is the world's fastest-growing hedge fund market, while most assets in the category are managed out of the U.S., the London-based researcher said today.
Hedge fund assets worldwide amount to about a tenth of the $20.5 trillion managed by mutual funds in Europe and U.S., according to Bloomberg calculations based on data from the Investment Company Institute and the European Fund and Asset Management Association.
Hedge funds worldwide returned an average of 13 percent last year, according to Chicago-based Hedge Fund Research, which estimates global assets in the industry at $1.4 trillion. That return lagged behind returns including dividends of 16 percent for the Standard & Poor's 500 Index and 21 percent for the MSCI World Index.
The survey said ``an increasing proportion'' of hedge fund assets comes from institutional investors, and half of the industry's assets are invested through funds of hedge funds with portfolios that include a mix of other hedge funds.
HedgeFund Intelligence said hedge fund managers looking after $1 billion or more each account for $1.6 trillion of the industry's assets. More than half of those managers are in the U.S., while 105 of the largest managers are in Europe, and 35 are in Asia.
Europe was the fastest-growing hedge fund market, with assets reaching $460 billion by January, up 41.5 percent from 2005.
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Among hedge funds with at least $1 billion, more than 35 percent are in New York and account for 41.5 percent of assets. London is the second most popular location for large hedge funds, with 72 managers running $1 billion or more each and account for 16.7 percent of global assets.
Connecticut, home to the largest hedge fund ever to collapse, ranked third among centers for hedge funds with more than $1 billion. The state has about 30 hedge funds managing at least $1 billion for a total of $170 billion. Amaranth Advisors LLC, based in Greenwich, lost $6.6 billion last September on wrong-way bets on natural gas.
Hedge funds are mostly private and unregulated pools of capital where managers can buy or sell any assets, participating substantially in the profits of the money invested. The average actively managed stock mutual fund sold in the U.K. charges about 1.45 percent, according to the research firm Lipper Fitzrovia. |
