Hedge Fund Assets Back At Pre-Crisis Levels

Mar 3 2010 | 5:40am ET

It’s as if 2008 never happened.

Hedge funds are back to where they were three years ago, at least as far as assets under management are concerned. The industry grew by 62% last year, according to the Hennessee Group, bring total assets to $1.96 trillion, roughly where they were before the economic crisis struck.

All told, hedge funds managed $751 billion more at the end of 2009 than they did at the beginning. Much of that increase is the result of strong performance last year, but investors began returning to the sector, as well: Net inflows totaled $448 billion last year.

“Institutions are continuing to wake up to the notion that hedge funds actually add value,” Hennessee’s Charles Gradante said. “This is a direct result of performance during the crisis and 2009.”

The industry’s recovery is proving somewhat slower in Europe, however. European hedge funds grew by 9.1% in the second half of last year to reach $382 billion, according to Hedge Fund Intelligence. At their peak at the end of 2007, the European industry measured $575 billion.

“The hedge fund industry in Europe has turned the corner and is starting to recover quickly from the earlier downturn,” Nick Evans, editor of HFI’s EuroHedge, said.

Taking into account the rash of UCITS III-compliant hedge funds, European funds manage a total of $405 billion.

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