12/04/2010 Author: Shannon Hawthorne

FoHFs down 17% as hedge fund assets reach $1.7trn, report reveals

Total fund of hedge funds (FOHF) assets fell by 17% to around $500bn last year, despite a 13% rise in hedge fund assets by 13% to $1.7trn, according to research conducted by the International Financial Services London (IFSL).

The firm’s annual Hedge Funds report revealed that FoHF assets were over 40% below the peak seen two years earlier, a fall largely due to reputational damage caused by the Madoff scandal, as well as the global economic downturn.

In contrast, hedge funds performed relatively well with net outflows of $85bn largely offset by the industry’s strong performance which saw average returns of 19%, the best in a decade.

New fund launches also exceeded the number of liquidations in the second half of the year, although there were over 1000 less hedge funds in existence at the end of 2009 compared to the peak seen two years earlier.

The report also revealed that Europe has more than doubled its share of total hedge fund assets since the beginning of the decade, with 20% of global assets currently managed from London.