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London hedge funds top USD 220 billion AUM in 2005

Hedge fund assets managed out of London grew 18% in 2005 to USD 225 billion making the city one of the world's fastest growing hedge fund centres.

However, growth in assets in 2005 was lower than in previous years mirroring a global trend (see table below), according to the 2006 edition of IFSL's Hedge Funds report. Although New York remains the leading hedge fund centre, London's share of global assets doubled to 20% between 2002 and 2005 as growth in Europe outpaced growth in the US. This was largely a result of an increase in investment from European institutional investors such as pension funds and insurance companies during this period.

London is by far the largest centre for European hedge fund managers. The 700 funds located in London accounted for three-quarters of European based hedge fund assets at end-2005. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London's share was more than 90%. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.

Factors underpinning London's strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favourable regulatory environment. London is also a leading centre for hedge fund services notably prime brokerage services offered by the leading London based investment banks. More than 90% of European prime brokerage activity is conducted through London.

London's Share of Hedge Fund Assets Under Management
Assets ($bn) London 's % share of
London Europe
(inc London)
Global Europe Global
2002 61 84 592 73 10
2003 119 180 795 66 15
2004 190 256 1000 74 19
2005 225 300 1130 75 20
Source: IFSL estimates based on Eurohedge and Hennessee Group data

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