SOURCE: AR Magazine

AR Magazine

September 30, 2010 10:27 ET

Combined Assets of Billion-Dollar Hedge Funds Nearly Flat in First Half of 2010, AR Magazine Survey Finds

Assets Far Below 2008 Peak; Top Firms Grow Larger

NEW YORK, NY--(Marketwire - September 30, 2010) -  With hedge funds turning out small profits in 2010, it's no surprise that the amount they manage has stagnated. Hedge funds operating in the Americas hold a combined $1.202 trillion, 1.7% more than these funds managed at the beginning of the year, according to latest Billion Dollar Club, AR Magazine's survey of American hedge funds managing $1 billion or more.

Globally, hedge fund assets amount to $1.9 trillion, up slightly from the $1.82 trillion managed at the beginning of the year. Global hedge fund assets totaled $1.72 trillion on July 1, 2009.

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

As of July 1, there were 217 hedge fund firms with assets of $1 billion or more. That's compared with 213 funds holding a combined total of $1.182 trillion at the beginning of the year, according to the survey, which appears in the October issue of AR.

Despite last year's recovery, hedge fund assets are down 28% from their market peak in July 2008, when the biggest 268 American firms managed $1.675 trillion.

Asset growth has been hampered by this year's lackluster performance as well as investor redemptions. U.S. hedge funds gained just 2.7% in 2010 through the month of August, according to the AR Composite Index. That result is due largely to a tough second quarter; in May alone, three-quarters of all hedge funds posted losses.

"The broader market's erratic behavior has challenged hedge funds, as many managers are having a tough time posting substantial returns," said Amanda Cantrell, managing editor of AR. "Though many hedge funds lost money and suffered redemptions in the first half of the year, the biggest firms in the industry still managed to increase assets, if only slightly."

Nearly half (46%) of the $1 billion-plus hedge funds in the Americas either lost assets or stayed flat in this year's first half, according to the survey. The bulk of this year's growth in assets was experienced by the biggest firms. Assets managed by firms with more than $5 billion have increased by 1%, to $851 billion, since the beginning of the year. These largest firms, which number 72, control 71% of the assets in the Billion Dollar Club, a percentage that has not changed in the past year.

Bridgewater Associates emerges as this year's biggest winner. With $50.9 billion as of July 1, Bridgewater is not only the largest American hedge fund firm but also notched the biggest gain in assets, adding $7.3 billion -- or 16.74% -- since January. The strong performance of Bridgewater's Pure Alpha Fund II powered much of this growth.

The number two spot goes to JPMorgan Asset Management, which had $41.1 billion as of July 1. That's $2.7 billion more than the firm managed on January 1, with growth attributed to inflows into JPMorgan's fund business. JPMorgan's Highbridge Capital Management unit lost assets, falling to $16.46 billion from the $17.9 billion in managed in January.

Paulson & Co. takes number three with $31 billion, $1 billion less than in January 2010.

In dollar terms, the assets of D.E. Shaw Group fell more than any other firm this year. D.E. Shaw managed $17.8 billion as of July 1, down $5.8 billion from its January 1 total. D.E. Shaw has lost more than one third of its total hedge fund assets under management in the past year. Most of that loss occurred in the second half of 2009, when the firm paid out redemptions after having suspended investor withdrawal requests in 2008.

American hedge funds control the bulk of industry assets worldwide. By far, New York remains the central hub, accounting for $714.77 billion, or 59% of assets managed by the Billion Dollar Club.

TOP TEN HEDGE FUNDS IN THE AMERICAS  
  Firm AUM ($ billions)
  Bridgewater Associates 50.9
  JPMorgan 41.1
  Paulson & Co. 31
  Soros Fund Management 27
  Och-Ziff Capital Management Group 25.3
  BlackRock 22.83
  Angelo, Gordon & Co. 22.68
  Baupost Group 22
  Farallon Capital Management 20
  King Street Capital Management 19.3
Source: AR Magazine  

About AR
AR Magazine, and its online offering at www.absolutereturn-alpha.com, is a thought leader for the hedge fund industry, delivering the most insightful, entertaining and authoritative published content about hedge funds online and in print. AR is a publication 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.

Contact Information

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    Melissa Mandel
    Rubenstein Associates
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