Hedge fund assets grew last year to $1.96 trillion, levels not seen since the pre-crisis days of 2007, according to Hennessee Group LLC, an adviser to hedge fund investors.
The jump in assets by $751 billion to $1.96 trillion was a 62% increase for the year, the Hennessee Group said. To avoid double counting, fund-of-fund assets are not included in the asset growth analysis.
“Despite many of the well-publicized challenges the industry faced entering 2009, particularly after the Madoff scandal, the industry was able to persevere and experienced 37% in new asset growth over the full year period,” said Charles Gradante, co-founder of Hennessee Group. “New assets are coming from the traditional long-only side; in part due to the horrendous losses in 2008 coupled with an improved comfort level with hedge funds for those institutions with 10 or more years experience in hedge funds.”
According to preliminary data, hedge funds had net inflows of $448 billion in 2009, the largest inflow of assets in the hedge fund history, according to Hennessee Group, which tracks performance of more than 1,000 hedge funds across strategies.
In 2008, a year that saw the failure of Lehman Brothers and Bear Stearns, hedge fund assets declined by $399 billion or 20%.
Looking back to 2009, $302 billion, or 25% of the jump in assets was related to positive performance. The Hennessee Hedge Fund Index -- a measure of performance among hedge funds -- jumped 24.6% in 2009, the best annual gain in a decade.
When it comes to investment specialty, arbitrage and event driven funds’ assets were up approximately 44% in 2009, while long/short equity funds’ assets increased 32%.