Manager performance accounted for 20% of the growth in the industry and capital inflows added 14% to the growth totals. With the growth, the industry grew from $592 billion to $795 billion, according to Hennessee Hedge Fund Advisory Group’s 10 thAnnual Hennessee Hedge Fund Manager Survey.
Over the past year, the number of hedge funds grew 23% from 5,700 to 7,000 funds. Further, the survey found the growth is not limited, with Hennessee finding hedge funds have the capacity to growth assets by 197% on average from current levels.
Hennessee found the fastest growing source of capital for hedge funds are fund-of-funds, which have grown 810% since January 1997. Further, pension funds that invest directly in hedge funds have grown 453% over the same time period.
Since 1987 hedge funds have generated an annualized return of 15.34%, compared to the S&P 500, which has returned 12.11% over the same time period, the survey found. On average, hedge funds turned their portfolios over three times per year.
The 2004 survey respondents include 789 hedge funds from 174 management companies and over $144 billion in assets. Questions about the survey can be directed to Alexander Smith-Ryland of the Hennessee Group at (212) 857-4444.