Hedge Funds Now Manage All-Time Industry High Of $2.02 Trillion

Hedge funds are back and bigger than ever. Fueled by fresh investor demand, these loosely regulated portfolios now manage $2.02 trillion, marking an all-time high for the industry, data released on Tuesday by Hedge Fund Research (HFR) show.

The previous record for assets was $1.93 trillion and was reached in the second quarter of 2008.

Investors added $32 billion in new money during the first three months of 2011, sending the biggest amount of new dollars to hedge funds since the third quarter of 2007, HFR said.

For hedge funds the news signals the industry appears to have recovered from the 2008 financial crisis when the average fund lost 19 percent and many managers lost significantly more.

"The current asset level reflects an increase of over 50 percent from the Financial Crisis low of $1.33 trillion in the first quarter of 2009," HFR wrote in a news release.

(Reporting by Svea Herbst-Bayliss; editing by Andre Grenon)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[fineartgalaxy]

03:42 PM on 04/20/2011

Amazing. The power of recovery these hedge funds have. Just 3 years ago the banks were blaming the hedge funds for all the evil in the world. And now, total recovery, bonanza and abundance. PR Americans. PR. Prosecution and Restituion of the stolen goods. Unless we start demanding legal action nothing will change.

[blueken]

02:22 PM on 04/20/2011

Hedge funds should only be for the wealthy. It should be against the law for a pension manager to invest in a hedge fund. Pensions should invest in goods and services that make this country better, make the world better. Then when the next bubble bursts, we can let the rich loose all their money. At one time there were regulations along those lines. We should bring them back.

[otop016]

04:43 PM on 04/20/2011

Pension funds have investment policies that restrict and limit the amount they can place with hedge funds. It's generally a very, very, very small percentage of total assets.

[pwhunter]

10:46 AM on 04/20/2011

When your pension fund or retirment fund or mutual fund needs toprotect its investment itself from a market crash, it buys insurance in the form of derivatives. The insurance is usually sold to them by hedge funds. This is a huge benefit to the stability of the markets. Without hedge funds, the market would be more volatile, not less, because there would be less buyers and sellers and thinner markets. There are two sides to every trade. Pension funds buy these derivative s because they need them. Please Don't paint all of it with a broad bush that it is evil or gambling because it is not.

[blueken]

02:19 PM on 04/20/2011

Hedge funds use math devised by John Nash to predict points in a chaotic system (the economy). John Nash won a Noble prize in economics. John Nash was totaly insane, and even he said his math would work until one more variable was entered. Then it wouldn't. Then you should stop. Hedge funds never stop until all the money is gone.

[pwhunter]

08:29 AM on 04/21/2011

That analysis assumes that all hedge funds are on the same side of the trade at all times. It is a zero sum.

[fineartgalaxy]

03:49 PM on 04/20/2011

No, it is not evil. You just have to know what you are doing. And that is the problem. Not necessarily the hedge funds but the market in general. How many working people have their retirement funds in the market without a clue as to what is going on? Retirement funds should not be placed in the market unless the holder knows the market. The stock market in general is not the place for a modest retirement account.

[wardropper]

07:36 AM on 04/20/2011

...fuelled by fresh investor demand...

It really is time to explain to these investors, upon their very first contact with the company in which they are planning to invest, that profits will not be made when nobody wants the product.
And it needs to be explained with extreme prejudice.

[catchmyeye]

07:24 AM on 04/20/2011

Second verse same as the first.

[EricBishop]

05:01 PM on 04/20/2011

You should ask Mike Bury and the Cornwall Capital guys if they like the tune.

[leorangerie]

01:56 AM on 04/20/2011

Hedge funds have a disproportionately large impact on the markets, because they make massive moves in a matter of seconds. In 2008 the hedge funds were hit with massive redemptions, causing lightening quick sales of stocks into a sinking market, thereby driving the market deeper and deeper into the red, and impacting millions of small investors. This is bad. If small investors understood this game, they wouldn't be in the market at all. But the financial firms remain mum, wanting to keep the business. Sort of shameful, really.

[spkninglsh]

12:51 AM on 04/20/2011

It worked out so well for THEM the first time.

[afgail]

11:02 PM on 04/19/2011

Some people never learn. Those investors will be fleeced again. The hedge funds don't produce anything tangible, just shuffle money and the crooks on Wall Street skim off huge commissions for doing nothing of value.

[pwhunter]

10:44 AM on 04/20/2011

If people thought they were being fleeced by hedge funds, the wealthy wouldn't invest in them. Hedge funds, at least the ones that have stayed in business, have a much better track record of creating wealth than mutual funds do, because of their ability to be able to profit from market declines. Would you prefer that this business didn't exist? Would the market be more stable is everyone was betting from the long side only, and not able to sell short?

[Genders]

11:01 PM on 04/19/2011

Leveraged shorts are a cancer. Till the average Joe understand that, the banksters own us. most derivatives are a cancer, worst of all, Swaps. Derivatives no exceed actual asset trading by 10-100 times. It's gambling. Seize the Bankster casinos for fraud. our regulations are the most lax since before the Depression, our taxes are the lowest since the Depression. What do you think is coming next?

[pwhunter]

09:24 AM on 04/20/2011

When your pension fund needs insurance to protect its investments from a crash, those derivatives that you deem as gambling are the very instruments that protect your money. There are two sides to every trade. Pension funds buy these derivatives because they need them. Don't paint all of it with a broad bush that it is evil or gambling because it is not.

[Genders]

04:07 PM on 04/20/2011

Wow, how many crashes and bailouts does it take to convince you derivatives don't insure assets, they simply cause the crashes to be bigger. AIG ring a bell????

We did great without swap and most of the derivatives we have to day, we crashed when we relied on them, Swap are "insurance" like Mob insurance on stuff you don't own. They are bets, and they are over leveraged.

[Peanut Santiago]

10:44 PM on 04/19/2011

ANOTHER economic meltdown coming..........3..........2...........1.............

[corsair1917]

10:36 PM on 04/19/2011

And those managing make MILLIONS UPON MILLIONS of dollars... and have some crazy ways off not having to pay tax on it.

[leorangerie]

10:13 PM on 04/19/2011

Hedge funds are computer games with real consequences. The gains benefit a few, but when things go wrong, millions of people are impacted. It is a bad, bad formula.

[pwhunter]

10:37 PM on 04/19/2011

The gains don't only benefit a few. hedge funds, as a group, pay a huge share of the tax revenue that this country desperately needs, especially with a 14 trillion debt. Can you name any hedge funds that took bailout money in 2008 or 2009? Please name one.

[otop016]

12:44 AM on 04/20/2011

Not directly...but many firms used bailout money to satisfy outstanding (and in some cases, quite large) collateral calls issued by hedge funds. For the record, I believe the problem would have been an order of magnitude worse had these calls not been agreed to and paid.

[leorangerie]

01:49 AM on 04/20/2011

I don't think bailout money is the issue. When the hedge funds were hit with massive redemptions in 2008, fund managers were forced to liquidate at rapidly declining prices...and that drove the market deeper and deeper into trouble. And that's the part that impacted millions of mutual fund holders.

[donidarko]

09:58 PM on 04/19/2011

These jackasses produce nothing but moving money around...and our asinine government allows it....what does that say about USA citizens?

[pwhunter]

10:40 PM on 04/19/2011

hedge funds fund don't produce anything? Without hedge funds, many of the great companies and ideas that now make our lives easier wouldn't have ever happened. the next great idea, whether it is google, apple, or microsoft, will mostly like come from funding from a hedge fund. They are also the ones that fund the banks that lend money to you for your mortgage, and the profits they make help the endowments of universities and charities and hospitals. to say that they don't produce anything is nonsense.

[donidarko]

11:13 PM on 04/19/2011

Oh come on....what you are describing is investing. Hedge funds play the market. PLEASE.

[NYCIC]

08:04 AM on 04/20/2011

Right. That was the reason these betting parlors blossomed, because the managers were motivated by wanting to make our lives easier. Gee, thanks for clearing that up.

[Peter Combs]

10:59 PM on 04/19/2011

you apparently need to take a course in finance....."produce nothing but move money around"...????

[donidarko]

11:22 PM on 04/19/2011

Yes exactly what I said...Produce NOTHING!!!!! ponzi ponzi ponzi......

[Amber Berglund]

01:21 AM on 04/20/2011

According to what I read on Wikipedia...investing in hedge funds is kind of like gambling. Based on what I just read, donidarko isn't necessarily wrong. They don't actually produce anything. It's similar to a mutual fund, but only more exclusive and not subject to the same restrictions as other investment funds.

How is it not like gambling?...and in some cases, how is it not like rigged gambling? ...and in other cases, how is it not stealing?

You seem to want to defend the Hedge Fund, but you haven't written anything to support your case. Did you work for Enron?

[donidarko]

09:56 PM on 04/19/2011

Yeah...producing absolutely nothing...bailout..??? Not Next Time ..sorry fellas.

[Blackdogsailing]

08:25 PM on 04/19/2011

Thank goodness things are back to normal!!!!