Industry Updates

New American hedge funds attract $17.4bn in 2010, up 17% from inflows to new funds in 2009

Tuesday, February 01, 2011

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Opalesque Industry Update - The environment for hedge fund launches improved markedly in 2010 after a dismal 2009. At least 59 new funds with more than $50 million in assets under management were launched last year, garnering $17.4 billion, according to the latest survey of hedge fund start-ups in AR magazine.

That’s a 17% gain over 2009, when the 53 funds that began trading garnered $14.89 billion, an all-time low for the survey in terms of both assets and fund launches, according to the AR New Funds Survey, published in the February issue of AR. The complete ranking and commentary can be viewed here.

The biggest launches came from established players or groups that already had assets under management.

Bridgewater Associates formed the largest new vehicle with Bridgewater Pure Alpha Major Markets Trading fund, which incorporates the most liquid portions of its high-performing flagship, Bridgewater Pure Alpha. The new trading vehicle was not marketed to new investors but instead was created for clients with gains from the flagship fund that could not be reinvested in that fund.

The other two funds launched last year that now manage more than $1 billion came from proprietary desks at investment banks. Overland Advisors, the spin-off of a proprietary trading group at Wells Fargo, raised $2.2 billion in assets. The multistrategy relative-value firm is headed by Derek Dunn and Gordy Holterman.

Andrew Hall, the former Citigroup star energy trader whose proposed $100 million bonus last year came under public scrutiny, attracted $1.5 billion for his Astenbeck Commodities Fund II.

Michelle Celarier, editor of AR, said, “New fund launches increased at a healthy rate last year, though 2010’s total is well shy of the $23.17 billion reached in 2008 and less than half of the record $40 billion amassed in 2004. Our survey indicates that investors remain skittish about backing brand-new managers, and raising money is still far more challenging that it was before 2008.”

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