Hedge Funds, Funds of Funds up 14.5% in 2007

March 4, 2008 (PLANSPONSOR.COM) - There was a 14.5% increase in the number of hedge funds and funds of hedge funds reporting to hedge fund databases in 2007 compared with the year before, according to PerTrac Financial Solutions.

A PerTrac news release said the results of its annual hedge fund database survey found that the number of single-manager hedge funds increased by 11%, while the number of funds of hedge funds increased by 21%.

The 2007 study, conducted using data from 11 major hedge fund databases, combined and analyzed with the PerTrac Analytical Platform, found a total of over 54,000 investment records across all databases, including both single-manager hedge funds and funds of hedge funds.

While the hedge fund universe continues to grow, it appears to be growing at a slower rate in recent years, according to PerTrac. The number of new fund launches, for both single-manager funds and funds of hedge funds, fell sharply in 2006.

Nearly 5,050 single-manager hedge funds started in 2006 – a 26.4% decrease in fund launches from 2005, when approximately 6,850 new single-manager funds were put into the market. Launches of new funds of funds fell off dramatically for the second consecutive year in 2006. About 2,250 new funds of funds started in 2006, a decrease of 22.2% from 2005, when nearly 2,900 new fund of funds kicked off. 

According to PerTrac, other key findings include:  

  • Approximately 21,000 distinct funds reported performance data in 2007.
  • Approximately 15,250 single-manager hedge funds and approximately 7,400 funds of funds were identified,  This compares to 13,675 single-manager hedge funds and 6,100 funds of funds identified in the 2006 study.
  • Just over 4,600 distinct fund management companies (e.g., general partners) were counted.
  • Of the 15,250 single-manager hedge funds, approximately 13,900 reported performance in 2007. Of those, approximately 34% were onshore (U.S. domiciled) funds, and 66% were offshore (non-U.S. domiciled).
  • About 35% of identified single-manager funds were domiciled onshore while about 65% were domiciled offshore.
  • Single-manager funds in the databases account for approximately $2.1 trillion under management.    More than 350 funds have surpassed the $1 billion mark. Meanwhile, more than 40% of single-manager funds continue to manage less than $25 million.  
  • There were approximately 7,400 different funds of funds that appeared in the study, of which 7,100 had reported performance numbers in 2007. Of those, about 13% were domiciled onshore and 87% were offshore.

More information is available at  www.pertrac.com .