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Originally published April 16, 2013

Much appreciation to our friends and colleagues at HedgeFund Intelligence for the below synopsis – as excerpted from their bi-annual Global Review (Spring 2013).  Reprinted with full permission.

A ssets in global hedge funds continued to grow in 2012 on the back of solid average fund performance across the industry last year and new inflows from investors worldwide, according to the latest research from leading industry information provider HedgeFund Intelligence (HFI).

In the newly-published Spring 2013 issue of its bi-annual Global Review, HedgeFund Intelligence reports that assets in hedge funds of traditional types – which are mostly domiciled offshore or structured as limited partnerships in the US – reached $2.208 trillion (including parallel onshore versions) at the end of 2012.

That represents a rise of just over 7% compared with the corresponding figure of $2.059 trillion as at the end of 2011 – and an increase of over 20% from the hedge fund industry’s low point of $1.83 trillion at the end of 2008, in the wake of the global financial crash.

If other hedge fund strategies in standalone European UCITS onshore structures (with no parallel offshore versions) are also added, the latest global industry assets total rises to $2.339 trillion – up by some 8.5% from its level of $2.156 trillion a year before.

The bulk of the industry’s total assets are concentrated in funds managed from North America – which accounted for $1.615 trillion in assets at the end of 2012, some 73% of the global industry – with European-based funds managing $415 billion (19%), Asian hedge funds running a further $82 billion (4%) and the balance coming from funds based in Latin America, Australasia and Africa.

Given that the HedgeFund Intelligence Global Composite Index recorded a median return of just under 7% across all hedge funds in 2012, it is clear that much of the overall growth in assets during the year resulted from investment performance – with new capital inflows into the industry being offset to an extent by outflows in other areas at a time of flux and change across the entire financial services world.

But the industry has now recovered much of the earlier steep decline that it suffered in 2008 from the onset of the global financial crisis – when global hedge fund assets fell by over 30% from the brief peak of $2.7 trillion in mid-2008, as tracked by HFI – and the accelerating pace of growth is encouraging against a backdrop of continued macro-economic uncertainty, investor caution and regulatory upheaval.

The Big Firms Dominate

M eanwhile, the biggest players in the global hedge fund industry are continuing to get bigger, accounting for a rising proportion of total assets, according to the latest statistics on the Global Billion Dollar Club – the elite group of firms that manage $1 billion or more in hedge fund assets.

Collectively, the 367 current members of the Global Billion Dollar Club (up from 340 a year before) managed assets of $1.925 trillion trillion at end-2012, up again from $1.76 trillion at the start of 2012, and now represent 87% of the industry’s total assets – up from 86% in 2011, 84% in 2010 and 82% in 2009.

The lion’s share of this figure is further concentrated in the ‘super-league’ of biggest firms that manage $5 billion or more in assets. The number of firms in that category has edged up from 99 to 107 over the past year. Collectively these firms account for $1.36 trillion – up from $1.23 trillion a year before – and they now represent more than 60% of the industry’s total worldwide assets.

The US market remains firmly the top location for the world’s biggest hedge fund firms. There are currently 260 firms that manage hedge fund assets of $1 billion or more from the US. And New York is still the biggest single centre of the industry by a margin, with no fewer than 157 of those firms, up from 139 a year before – with the city accounting for over 42% of all Global Billion Dollar Club assets.

London remains in second place overall, being home to 57 of the Club members and representing just under 14% of the total Club assets. The Asia-Pacific region accounts for around 2.5% of Club assets, with Hong Kong housing 12 Billion Dollar Club members and eight member firms based in Singapore.

In addition to the global assets survey and the latest Global Billion Dollar Club analysis, the HFI Global Review also features detailed insight on regional hedge fund industry trends and developments in the Americas, Europe and Asia – as well as on funds of hedge funds and institutional end-investors.

The publication also contains exclusive global data sets on new fund launches, fund shutdowns and current/historical performance across all major strategy areas – as well as extensive analysis of key global regulatory trends and in-depth interviews with leading hedge fund managers and investors.

Note: The figures referred to 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, a part of the HedgeFund Intelligence stable.

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