Investing January 12, 2005

Hedge Fund Assets Increase by $139 Billion in 2004

January 12, 2005 (PLANSPONSOR.com) - Hedge fund assets increased by $139 billion in 2004, $64 billion of that coming from positive investment performance, according to hedge fund investment advisor Hennessee Group.
Reported by

New inflows of assets into the industry amounted to $75 billion last year, with arbitrage and event driven funds pulling in the majority of new assets. Both strategies were up around 27% last year, according to a press release from Hennessee. By strategy, arbitrage/event driven funds returned 7.98% on investments in 2004.

Multi-strategy funds gained ground in 2004, with single-strategy shops posting net outflows on the year, according to Hennessee. Long/short strategies did not see huge growth in 2004, posting 11% gains, most of it on the back of performance, and not inflows.

The company estimated that total global hedge fund capital now stands at $934 billion. Hennessee estimated that there are now upwards of 8,000 hedge funds, a rise of 1,000 on the year.

Individuals and family offices still account for the largest source of assets for hedge funds, representing around 44% of total capital, according to the company. Fund of hedge funds represent 24% of total hedge fund assets, while corporations and institutions represent a smaller 15% of the industry’s assets. Pension plans hold 9% of industry assets, while endowment and foundations hold 8%.

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