Combined assets of 'Billion-Dollar Hedge Funds' reach USD1.4 trillion, says survey

American hedge funds reported a healthy increase in assets in this year's first half and now manage a combined USD1.399 trillion. That's USD102 billion, or nearly 8%, more than they managed at the beginning of the year, according to the latest Billion Dollar Club, AR Magazine's survey of American hedge funds managing USD1 billion or more.

Bridgewater took the top spot again, followed by JP Morgan Asset Management and Paulson & Co.

Globally, hedge fund assets amount to USD2.16 trillion, up slightly from the USD1.82 trillion managed at the beginning of the year.

As of 1 July, there were 241 American hedge fund firms managing assets of USD1 billion or more, according to the survey, which appears in the October issue of AR. That's an increase since January 2011, when there were 225 such funds holding a combined total of USD1.297 trillion, according to the survey.

While hedge fund assets have been slowly recovering, the industry remains down nearly 20% from its market peak in July 2008, when the biggest 268 American firms managed USD1.675 trillion.

The industry's growth comes at a time when overall hedge fund performance has been lacklustre, indicating that most of the increase is due to new inflows from investors. Through the end of June, the AR Composite Index had gained 1.79% and stood at 0.42% at the end of August.

"Many managers are having a tough time posting substantial returns this year," says Amanda Cantrell, managing editor of AR. "The fact that investors are allocating more money to hedge funds indicates a real recovery of confidence in the industry."

Several big-name hedge fund managers decided to return external capital in the first half, but those resulting industry losses were in part offset by several sizeable new launches and the increasingly fast-paced growth at some spin-outs, including PointState Capital, which has raised USD5 billion; Soroban Capital Partners, which has raised USD2.1 billion, and Knighthead Capital Management, with USD2.3 billion under management.

Bridgewater Associates emerges as this year's biggest winner. With USD70.3 billion as of July 1, Bridgewater not only remains the largest American hedge fund firm but also notched the biggest gain in assets, adding USD11.4 billion -- or 19.35% -- since January. The rapid growth of Bridgewater's new Pure Alpha Major Markets Fund, which the firm launched last year as a way to cap its original Pure Alpha fund, accounted for much of these gains.

The number two spot goes to JP Morgan Asset Management, which had USD55.2 billion as of 1 July, a jump of more than 21% from the beginning of the year. Most of that growth is attributed to inflows into JP Morgan's hedge fund business, although its Highbridge Capital Management unit also gained USD2 billion during that period.

Paulson & Co. takes the third spot with USD35.2 billion, USD800 million less than in January 2011.