As we reported on our website in late March, global hedge
fund assets have hit the $2 trillion mark. But that was then.
That amount accounts for assets under management at year-end,
and since then, the dollars have kept rolling in. Some of the
big gainers we're writing about this month include Third Point,
which is now $6.7 billion; Davidson Kempner Advisers, which has
gotten so large ($15.3 billion) that it closed its flagship
fund to new money on April 1; and Millennium Management, which
has added another $1.8 billion this year.
This issue is full of evidence that hedge funds have finally
turned the corner after the disastrous year of 2008. One data
point that indicates a big change for the industry is that some
70% of the thousands of funds which report their returns to the
AR database hit their high-water marks last year. About half
had been below that important measure since the crisis as of
August 2010, but the yearend rally gave them a lift. With more
funds able to collect performance fees, they gave bigger
bonuses to junior staff as well as investor relations and
marketing professionals last year than they did in 2009, our
annual compensation survey shows.
New fund launches are also taking off this year. For
example, the TPG-Axon Capital Management offshoot Soroban
Capital Management, launched in November by former Goldman
Sachs chief operating officer Eric Mandelblatt, surpassed the
$1 billion mark in March.
But all is not rosy. Our annual prime brokerage survey
indicates that most brokers are servicing more hedge fund
assets this year than last because of the growth of the
industry. However, those funds are not spreading their business
around as much as they did in the immediate post-Lehman world,
causing market shares to shrink. Moreover, interest rates are
low, and stock lending (and shorting) is down, which is making
it a tougher business all around.
So far the good news in hedge fund land (if not elsewhere)
is far outweighing the bad this year. Fingers crossed that it