Assets under management of the global hedge fund industry increased 30% in 2007 to a record $2,250 billion, according to the 2008 edition Hedge Funds, a report from International Financial Services London. Most of this growth was in the first three quarters, as market turbulence in the latter part of the year resulted in a slowdown in inflow of new funds and a decline in average returns.
New York remained the leading global location for hedge fund managers with 40% of global assets. Its share was down from 50% in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the US. This was largely a result of a rise in institutional portfolio allocation into hedge funds in these regions during this period.
London’s share of global hedge fund assets doubled to 20% in the five years up to 2007. Assets managed by hedge fund managers in London totalled around $400 billion in 2007. The 1,000 hedge funds located there accounted for four-fifths of European based hedge fund assets. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London’s share of the European market was more than 90%. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland. The London Stock Exchange is the location of choice for listing fund of hedge funds in Europe.
London is a leading centre for hedge fund services notably prime brokerage services offered by the leading London based investment banks. More than 90% of European prime brokerage activity is conducted through London.
The main purpose of the research and statistics function at International Financial Services London is to raise awareness of the UK’s role in international financial markets and to highlight the contribution of financial services to the UK economy.