Hedge fund industry grows 34%, says survey

The hedge fund industry grew 34% in 2003, from $592 billion to $795 billion, according to a survey by Hennessee, the New York hedge fund adviser.

In its tenth annual hedge fund manager survey, Hennessee found that in the last year the total number of hedge funds increased 23%, from 5,700 to 7,000 funds. However, the industry still represents less than 2% of world financial markets.

Growth, said Hennesse, was down to manager performance and new capital inflows. Since 1987, hedge funds have generated an annualised return of 15.34% with 40% less volatility than the Standard & Poor’s 500 return of 12.11% over the same time period, added the group.

The survey also found that 58% of hedge funds are registered with a regulatory agency.

Fund of funds were found to be the fastest-growing source of capital for the industry, with an 810% increase since January 1997, from $21 billion to $191 billion. Pension fund investment directly into hedge funds has also increased significantly, up 453% in the same period from $13 billion to $72 billion.