The Global Hedge Fund Industry Struggled in 2008 Overall assets fell to $1.4 trillion, down from almost $2 trillion in mid-2008.
What a difference 12 months makes. After a year marked by losses and redemptions at hedge funds, Institutional Investor’s annual ranking of the world’s biggest single-manager hedge fund firms has a mix of new players and old, and overall numbers are down.
The firms in our eighth annual ranking of the world’s biggest single-manager hedge fund firms oversaw a combined $1.03 trillion in assets. It’s a kingly sum by most measures, but is down substantially from the record $1.35 trillion the world’s 100 largest firms managed at the end of 2007.
The falloff is hardly surprising, given that hedge funds had their worst year ever in 2008. Industry-wide assets tumbled by $525 billion from their mid-2008 peak, to finish the year at $1.4 trillion, according to Chicago-based Hedge Fund Research, as two out of every three hedge funds lost money. The poor performance sparked a rush for the exits, which could have been even worse if scores of funds had not erected gates to prevent investors from redeeming assets on demand.
In recognition of this difficult new world, we’ve changed the methodology this year for the Hedge Fund 100, using firm and fund asset totals as of January 1, 2009 (in the past we collected December 31 data). This year’s threshold for qualification on the list also reflects the timbre of the times. To make Institutional Investor’s Hedge Fund 100, a firm needed at least $4 billion in assets under management. A year ago the hurdle was $6.25 billion.
In Alpha's 2009 Hedge Fund 100, we provide each manager's total assets under management as of January 1, 2009, unless otherwise indicated. Where possible, we also show assets at the individual fund level, with 2008 net returns through year-end, for the five biggest funds run by a firm.
Asset totals reflect internally run, single-manager hedge funds and separate accounts, including long-only funds that charge hedge-fund-style fees; they exclude funds of hedge funds, overlay accounts, funds managed by third parties, mutual funds and traditional long-only money, dynamic money market funds, assets in collateralized debt and bond obligations, private equity and venture capital.
We gathered data through questionnaires completed by hedge fund managers, supplemented by extensive Alpha staff research. The ranking was compiled by Associate Editor Julia Leikin, with the assistance of Contributing Editor Stephen Taub and Researcher Lauren Bennett, under the guidance of Senior Editor Jane B. Kenney. To request a questionnaire for next year's Hedge Fund 100 ranking, please e-mail your contact details to HF100@iimagazine.com.