Further underscoring their growing role as profit source, the hedge fund segment generated $25 billion, or 12.5%, of total revenues in fees last year for major investment banks.
According to new data from Credit Suisse First Boston (CSFB), a March 11 report from Reuters reveals, investment banks brought in $19 billion worth of inflows from hedge fund sales and trading activities in 2004. Prime brokerage, or the banking services and securities provided to hedge funds, accounted for the remaining $6 billion, CSFB said.
According to Reuters, the largest prime brokers are Morgan Stanley and Goldman Sachs. Between them, they handle about 50% of the world's hedge fund pool. Bear Stearns is the No. 3 player, commanding about 13% of the market.
There are roughly 7,500 hedge funds operating around the world today. They now manage about $1 trillion in assets, a far cry from the $40 billion of 1990. The largest hedge fund manager is the Swiss financial services group UBS, which handles around $46 billion of assets.
