The biggest hedge funds are getting bigger—through increased use of leverage.
Hedge Fund Alert's list of the largest 200 hedge fund managers saw widespread growth, with that group now managing $3.3 trillion, up from $2.7 trillion last year. The number of hedge funds with at least $10 billion in assets increased to 90, from 74, and those with at least $25 billion increased to 32 from 20.
HFA's list is unusual among industry rankings, in that it lists managers by gross assets under management—including leverage. And that explains why, despite modest returns and inflows, the biggest hedge funds have gotten so much bigger.
Take HFA's largest hedge fund this year, Millennium Management. The New York-based firm has just $16.9 billion in equity capital, but its gross assets are an astonishing $198.2 billion, enough to top what is generally seen as the world's largest hedge fund by assets, Bridgewater Associates.
Bridgewater did come in second on the HFA list, with $139.3 billion. The firm is hurt also by HFA's exclusion of separate accounts and other vehicles. Last year's leader, Citadel Investment Group, fell to third this year with $107.6 billion in gross assets, followed by BTG Pactual Asset Management ($78.9 billion) and SAC Capital Advisors ($75.4 billion).
Pine River Capital came in sixth with $74.5 billion, more than twice its gross assets last year. Also doubling up (or more) from last year were MKP Capital Management at $24 billion and Structured Portfolio Management at $11.8 billion.
JPMorgan Chase, which includes Highbridge Capital Management, had gross fund assets of $26.5 billion.