The loosely regulated hedge fund industry posted a 19% gain last year, attracting $73.6 billion in new assets, according to data released by Hedge Fund Research Inc.
Hedge funds, which now manage roughly $972.6 billion in assets, have exploded in popularity as investors contributed $27 billion in new money in the final quarter of 2004. That was a sharp rise from the $16.9 billion added in the previous quarter.
Notably, hedge funds that sought companies facing bankruptcies, mergers or acquisitions grew the fastest, with $128.6 billion in assets, or a 28% gain at the end of the year. Funds-of-funds, a variety that selects a portfolio of individual hedge funds, had the most assets under management, with $358.6 billion.
Even though last year's inflows were far less than the $198 billion hedge funds added in 2003, hedge fund assets in general have swelled from a decade ago, when they stood at $150 billion.
Hedge Fund Research President Joshua Rosenberg said he expects hedge fund assets to hit the $1 trillion mark in the next three months as funds attract more and more investors through aggressive marketing.