Clarifications of Pensions & Investments stories generally run on page four, but this particular clarification requires higher placement.
This clarification concerns hedge fund assets provided by J.P. Morgan for the “largest hedge funds” ranking that accompanied a March 8 story.
At the heart of the matter is the commonly accepted definition of a hedge fund.
For the ranking, large hedge fund managers were asked for total assets under management in hedge funds as of Dec. 31.
After the ranking was published, it was updated with a footnote about J.P. Morgan because the firm would not confirm that all of the assets provided were actually managed in hedge funds. (See the updated ranking at www.pionline.com/hfranking2010.)
None of the firms surveyed requested a definition of a hedge fund. The rest of the firms in P&I's ranking knew what a hedge fund was and reported assets accordingly. Only J.P. Morgan apparently applied a different definition.
After receiving calls and e-mails from readers inquiring about J.P. Morgan's hedge fund total, which seemed high to many, I asked J.P. Morgan officials to explain what was included in their calculation. They declined.
I was provided — off-the-record — with a definition the firm applied to calculate its hedge fund assets. J.P. Morgan officials agreed that I could use part of the internal definition in the post-publication footnote: “Total reflects assets managed in hedge fund strategies.”
That statement does not confirm that all of the $53.5 billion J.P. Morgan claimed as hedge fund assets was, in fact, managed in hedge funds.
Without cooperation, it is impossible to know what J.P. Morgan has included in its hedge fund total.
But it appears that assets managed in mutual funds using hedge fund strategies are part of the figure. J.P. Morgan officials said the $21 billion it included as managed by its subsidiary Highbridge Capital Management LLC represents the firmwide total managed in all investment vehicles. According to Bloomberg data, Highbridge managed $3.3 billion as of Dec. 31 in the Highbridge Statistical Market Neutral Fund, a listed mutual fund.