By Sam Jones
Published: May 27 2010 03:00 | Last updated: May 27 2010 03:00
The global hedge fund industry has more than $2,700bn of assets under management according to a survey of custodians and administrators released today – a figure that would make the industry far larger than most market participants have previously estimated.

Data from the top 79 administrators – independent companies that value and provide custody services for hedge fund assets – indicates that total funds under administration for the hedge fund industry have grown by more than 9 per cent over the past six months alone.

The $2,700bn estimate, calculated for a HFM Week survey, is a more accurate figure than those traditionally reported as indicative of the size of the hedge fund industry. And, unlike some other surveys, the estimates ignore any leverage in funds, keeping figures lower.

Most estimates – which put the total size of hedge fund assets under management between $1,700bn and $2,000bn – rely on information provided by individual managers. According to the HFM survey, assets under administration for the industry reached a low point in April last year of $2,200bn.

At its high point in April 2008, the industry managed $2,900bn, a figure that will be breached this year if hedge funds continue to attract the inflows they have done over the past few months.

Volatility in markets this month is proving something of a key test, however.

Many funds have seen positive performance in the first four months of the year erased by whip-sawing markets . Excluding October 2008, May is shaping up to be one of the most difficult months ever for the industry.

According to the HFM survey, much of the growth in assets under administration over the past few months has come through so-called managed accounts – legally separate, individual accounts run by fund managers that are segregated from their main co-mingled funds – a sign of the new-found conservatism and caution that many hedge fund investors are taking.

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web.

Advertisements