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New analysis shows hedge fund industry is booming

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New in-depth analysis by quant technologies provider SigTech, reports that after continued expansion in 2021, there are currently 27,255 active hedge funds globally.

The hedge fund industry remains dominated by the US market, which is home to 67 per cent of all hedge funds globally, followed by 9 per cent in the UK, 4 per cent in China, and circa 2 per cent each in Brazil, Canada and Switzerland. 

When it comes to the cities that have the largest concentration of hedge funds, unsurprisingly New York is the clear leader with nearly 7,000 funds  (25.0 per cent of total), followed by London with over 2,000 (8.2 per cent), and Hong Kong with nearly 1,000 (3.6 per cent).

The most popular hedge fund strategy is Equity Long/Short, followed by Multi Strategy, Equities others (eg, long bias, short bias), Fixed Income Credit and Event Driven.  The fast-growing sub-strategy Crypto now makes up circa 3 per cent of all hedge funds. Also noteworthy is that 22 per cent of the world’s hedge funds apply a purely quantitative investment process and ca. 2 per cent claim to use artificial intelligence.

On the backdrop of a strong performing hedge fund sector, new fund launches remain strong, with nearly 2,000 new launches per year on average since 2019. Of the 5,500 new hedge funds launched since 2019, 70.2 per cent are based in the US, 9.3 per cent in the UK and 5.2 per cent in China.

The most popular strategy for these new funds is Equity Long/Short, followed by Fixed Income Credit, Equity others (eg long bias, short bias) and Multi Strategy.

In 2021, a record number of 171 crypto hedge funds were launched. In total, there are now 774 hedge funds focused on crypto, with the US again being the driver of innovation with 80 per cent of these funds domiciled in the US.

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