The largest hedge fund managers reported significant growth in 2007, the result of decent returns and steady inflows, according to Pensions & Investments annual survey of the largest money managers.
Worldwide (gross) assets managed by the 25 largest hedge fund and fund-of-funds managers rose nearly $306 billion or 73% to $722.2 billion as of Dec. 31, compared with $416.3 billion at year-end 2006.
Part of the asset growth can be attributed to hedge fund managers ability to not only navigate, but also to profit from, volatile global markets like those experienced in the second half of 2007.
Hedge Fund Research Inc.s two broad hedge fund indexes were strongly positive in 2007, with the HFRI Fund Weighted Composite index returning 10.36% and HFRI Fund of Funds Composite index, 9.94%. The indexes track single- and multistrategy hedge funds and hedge funds of funds, respectively, and both handily beat major market indexes. The Lehman Brothers Aggregate Bond index, for example, returned 8.62% in 2007, while the Morgan Stanley Capital International Europe Australia Far East index ended the year at 6.96% and the Standard & Poors 500 index came in at 3.56%
The increase in the worldwide assets managed by P&Is largest 25 hedge fund managers is partly the result of increasing cooperation and transparency from the hedge fund community, especially from hedge funds of funds. Six of the 25 largest managers of hedge fund assets appeared in P&Is ranking for the first time. The $722.2 billion managed by the 25 managers is 39% of the $1.87 trillion Chicago-based HFR estimated was managed by the entire industry as of Dec. 31, 2007, up from 29% as of year-end 2006.