Hedge Funds Lose Assets to End 2011

Hedge Funds Lose Assets to End 2011

Hedge fund investors pulled more assets than they contributed in the 4th quarter of 2011, leading to $127 million in net withdrawals in Q4, 2011, according to Hedge Fund Research. Despite equity market gains int he 4th quarter, the unwillingness of hedge fund investors to deploy more capital may not bode well for hedge funds in 2012 as they face more withdrawal pressure.

Hedge Fund Assets Under Management Reach $2 Trillion

Hedge Fund Assets Surpass $2 Trillion in 2011

Hedge fund assets under management (AUM) reached $2 trillion USD as of June 30, 2011. This is according to Hedge Fund Research (HFR). Assets surged past $2 trillion with $62 billion in net inflows for January 1 - June 30, 2011.  Most of these net inflows went to large hedge funds in excess of $5 billion, but with such large hedge funds accounting for 62% of overall hedge fund assets, the inflows were shared relatively equally by large and small hedge funds alike.

10 Largest Hedge Funds 2011

The Top 10 Hedge Funds, 2011

Here are the Top 10 Biggest Hedge Funds as of 2011*:
Note: See the updated list of the Top 250 Hedge Funds 2017
 

 Firm                                                        AUM

1  Bridgewater Associates                    $59.1 billion

2  JP Morgan Asset Management          $46.2 billion

3  Paulson & Co.                                  $37.1 billion

4  Brevan Howard Asset Management   $28.0 billion

5  Soros Fund Mgmt.                           $27 billion

6  Man Investments                             $25.3 billion

7  Blackrock Global                             $24 billion

8  Och-Ziff                                           $23 billion

9  Baupost Group                                 $23.4 billion

10 Farallon Capital Mgmt.                     $21 billion

* 2011 Assets Under Management (AUM)

Note that the top hedge funds in 2011 are not too dissimilar from the biggest hedge funds the year before. Bridgewater Associates surpassed JP Morgan Asset Management as the world's largest hedge fund. We will update the Top 10 hedge funds of 2011 throughout the year.

Source: HedgeLists

2010: A Banner Year for Hedge Funds

Hedge funds had an incredible 2010 in terms of performance. The group averaged a return of just under 20% for the industries best year since 1996.


Hedge funds' strong performance in 2010 is a result of several factors including a strong equity market, low volatility, and the self-selection process that has eliminated weaker hedge funds over the last couple of years.

If the equity and commodity markets are able to continue their bullish run (and there is certainly no guarantee of this) 2011 could be another great year for hedge fund performance.

Hedge Funds Increasing Leverage in 2011

In January of 2011 hedge funds increased their leverage to levels not seen since 2007, according to Bloomberg.


Though hedge funds seem to be increasing leverage in tandem with the rising market, it is not necessarily the case that record amounts of hedge fund leverage in 2011 indicate increased risk taking overall - available cash and margin available also increased.


Its also not unusual to see hedge funds lever into bullish (appearing) markets. It will be interesting to see how a moderate decline in the equity indexes will affect hedge fund leverage.