The US is the dominant component of the global hedge fund community, accounting for 72 per cent of the approximately USD3.1 trillion of global assets under management (AUM), as of 30 June 2016, according to data released by Preqin.
Although other regions are emerging as regards hedge fund activity, the US is home to 3,170 of the 5,092 (62 per cent) institutional investors active in hedge funds, and 3,209 of the 5,377 (60 per cent) active hedge fund managers tracked by Preqin.
The US hedge fund industry has also seen strong growth in recent years, increasing by USD13 billion in the first half of 2016 – despite global outflows – and by USD138 billion since the start of 2015. Moreover, in Preqin’s recent survey of over 270 hedge fund managers, notably more US-based managers reported an increase (26 per cent) in the proportion of their AUM allocated by investors than reported a decrease (4 per cent), depicting a positive outlook for the US hedge fund industry.
Hedge funds located in Pennsylvania charge the lowest average performance fee (17.54 per cent) of the top 10 most active US states, with funds based in Virginia charging the highest average fee of 20.00 per cent. Massachusetts-based vehicles charge the lowest mean management fee, at 1.25 per cent, while those located in Illinois have the highest fee of any state (1.58 per cent), on par with New York-based funds (1.57 per cent).
Hedge funds based in Texas have generated three-year annualised performance of 8.96 per cent, the highest of any of the top 10 US states, while Virginia-based vehicles have recorded returns of 8.13 per cent. Hedge funds in Illinois, Connecticut and Massachusetts have fared less well over the same period, with returns of 2.54 per cent, 2.80 per cent and 2.88 per cent respectively.
Over one-third (37 per cent) of US-based fund managers are based in New York, and collectively these firms hold USD1.1 trillion worth of assets – 36 per cent of global industry AUM. New York represents nearly half (46 per cent) of US-based funds incepted since 2009.
New York has the most active institutional investors (544) of any state in the US, while California are second in the list with 341 investors located in the state. The 77 New Jersey-based investors have an average current allocation to the hedge fund industry of 18.8 per cent, by the far the highest of any state. 

