Global hedge fund assets under management increased 30% in 2007 to a record $2.25 trillion, according to a new International Financial Services report.

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, but its share was down from 50% in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the U.S. 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 totaled an estimated US $400 billion in 2007. The 1,000 hedge funds located there accounted for four-fifths of European based hedge fund assets.