SOURCE: Institutional Investor

Institutional Investor

March 02, 2010 11:38 ET

Billion Dollar Hedge Funds Combined Assets Rise Just 4% in 2009, AR Survey Finds

Largest Firms Nearly Double Assets, JPMorgan Regains Top Spot

NEW YORK, NY--(Marketwire - March 2, 2010) -  Even after the gains of 2009, the hedge fund industry still has a long way to climb to get back to its peak, with the biggest American hedge fund firms managing 29% less than they did at their all-time high in 2008, according to AR: Absolute Return + Alpha (AR) magazine's biannual Billion Dollar Club survey of U.S. hedge fund firms managing $1 billion or more.

Full results are available online at www.absolutereturn-alpha.com.

As of January 1, the biggest 213 hedge fund firms managed combined assets of $1.182 trillion, a 4.2% increase above what they managed at the beginning of 2009 -- when 218 firms held a combined total of $1.134 trillion -- according to the latest survey, published in the March issue of AR. In July 2008, the industry's peak, the 268 biggest firms managed $1.675 trillion.

A handful of firms managing $5 billion or more nearly doubled their assets from a year ago, suggesting that the big are getting bigger. Scandals may be one reason the brand-name firms managed to grab a greater share of the pie in the second half of 2009, as investors sought the security of large, established shops. Also, a significant portion of the assets garnered in 2009 came from institutional investors redistributing previously allocated assets to long-closed megafunds that had reopened in an attempt to revive assets lost in 2008.

The 143 firms managing below $5 billion increased their assets by $28 billion. 

JPMorgan reclaimed the top spot, surpassing Bridgewater Associates, as the largest hedge fund firm in the United States. The firm now manages $50.4 billion between its JPMorgan Asset Management and Highbridge Capital Management units -- a $17.5 billion increase from the $32.9 billion managed between them in January 2009. 

Bridgewater fell to second place with $43.6 billion, a 17.84% increase from July 2009 when it managed $37 billion. Paulson & Co. remained in third place, with assets increasing 10.35% to $3 billion from the $29 billion it managed in January following strong returns in 2009. Soros Fund Management grew by 28.57% to $27 billion in 2009 and edged D.E. Shaw Group out of fourth place. D.E. Shaw dropped to fifth and was the biggest loser in the top 10, shedding 17.48% of its assets in 2009 to start 2010 with $23.60 billion.

Although still shy of making the top 10, BlackRock's purchase of Barclay's Global Investors resulted in an instant 235.63% increase in assets for the firm. However, the biggest gainer was distressed debt market manager Randall Smith's firm Alden Global Capital, which amassed an increase of 475% on top of its January 2009 assets of $400 million to reach $2.3 billion. Distressed funds were among the biggest winners, as distressed was one of the hottest strategies of 2009.

Full results are available online at www.absolutereturn-alpha.com.

New York remains the center of the hedge fund world, controlling $708 billion, or 60%, of the assets managed by the biggest 213 American hedge funds. Connecticut is the second largest, managing $158.86 billion. Massachusetts surpassed California to take third place with Massachusetts managers now running $87.49 billion.

The AR Billion Dollar Club is the only survey of American hedge fund assets that focuses on the aggregation of January 1 data, which includes the most recent redemptions and allocations, thereby making the survey more current and accurate than those focusing on December 31 numbers.

Full results are available online at www.absolutereturn-alpha.com

About AR
AR magazine, and its online offering at www.absolutereturn-alpha.com, features a fresh and much needed link between the hedge fund industry, its users and those who provide advisory, financial, and technological services to the sector. AR is a service of Institutional Investor and HedgeFund Intelligence, divisions of Euromoney Institutional Investor, the international publishing and information company.

See www.absolutereturn-alpha.com for more information.

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