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Hedge fund population smaller than most think

It's not unreasonable to think hedge fund managers are legion, given all the attention paid to them in gossip columns, popular television series like Showtime's “Billions” or the movie adaptation of Michael Lewis' book, “The Big Short.”

The truth is employees of firms managing hedge funds number 115,000 worldwide, a minuscule fraction of the world's human population, according to research from Preqin and the Alternative Investment Management Association, both based in London.

Preqin analyzed the employment data from 5,556 hedge fund managers and 707 hedge funds-of-funds firms and found that hedge fund manager head counts are higher on average at 29 in the U.K., compared with an average of 20 in the U.S.; and 15 in Australia, Brazil, Canada and France. The lowest average staff number — seven — is found in Hong Kong and Singapore.

Employment in the hedge fund industry as a whole increases by 275,000 when Preqin includes companies servicing hedge fund firms, such as law firms, auditors, prime brokers and administrators.

The combination of hedge fund manager and service company employee numbers shows that the U.S. is by far the largest market sector in the world with 253,000 workers total, Preqin's analysis revealed. In a distant second place was the U.K. with a total of 56,000 employees.

By comparison, AIMA conducted its own survey in December 2010 and concluded that the global hedge fund industry then employed about 300,000 hedge fund and service company employees and managed $1.6 trillion.

“The (hedge fund) industry continues on a strong long-term growth trajectory,” said Jack Inglis, AIMA's CEO, in the joint hedge fund employment report, adding “today, (the industry) manages around $3 trillion on behalf of more than 5,000 institutional investors and employs about 400,000 people.”

This article originally appeared in the May 15, 2017 print issue as, "Hedge fund population smaller than most think".