2011 Key Trends in North American Hedge Funds


The North American hedge fund industry has witnessed some significant trends since year 2000. At the turn of the millennium, the sector accounted for more than 84% of the global hedge fund industry with US$258 billion in assets managed by 1,815 managers. Over the next eight and a half years, the sector witnessed exponential growth with assets under management peaking in June 2008 at US$1.247 trillion – an increase of nearly 500%. The fund population also increased significantly to cross 4,600 funds over the same period.

Figure 1: Industry growth since 2000

However, during the second half of 2008 and early 2009 the industry suffered massive redemptions and significant performance-based losses, causing assets under management to fall to US$849.2 billion by April 2009. This period also witnessed a large number of hedge fund managers closing shop and the number of funds fell to 4,453 funds by end-June 2009. Despite the falling markets and record redemptions, the average North American manager witnessed losses of 9.31% in 2008 which can be seen as a significant outperformance to the underlying markets. The subsequent turnaround in global markets and return of investor confidence set the stage for a remarkable recovery in the North American hedge funds sector.

Excellent performance-based gains and positive net flows in the last three quarters of 2009 were followed by a period of consolidation in 2010 and 1H 2011. North American hedge funds have posted the strongest and most sustained recovery among all hedge fund regions. As at end-May 2011 the assets under management stand at ...


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