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As of January 1, 2011, American hedge funds managed a combined $1.297 trillion. That’s $115 billion, or 10%, more than these funds managed a year ago, according to the latest Billion Dollar Club, AR magazine’s survey of American hedge funds managing $1 billion or more.

Full results are available online at www.absolutereturn-alpha.com.

The rate of industry asset growth last year closely parallels the hedge fund industry’s overall performance. According to the AR Composite Index, hedge funds gained a median 9.15% in 2010. Most of the performance gains– and asset growth – came in the year’s second half.

As of January 1, there were 225 hedge fund firms with assets of $1 billion or more. That’s compared with 213 funds holding a combined total of $1.182 trillion on January 1, 2010, according to the survey, which appears in the March 2011 issue of AR.

Despite the industry’s continuing recovery, hedge funds would need to gain approximately 30%, or $378 billion, in assets to reach the market peak in July 2008, when the biggest 268 American firms managed $1.675 trillion.

“Industry assets haven’t yet reached their peak, but hedge funds continue to recover from the 2008 crisis,” said Amanda Cantrell, managing editor of AR. “The industry is also consolidating, with an entrenched leadership of firms managing more than $5 billion.”

The biggest hedge fund firms keep getting bigger, as the top 10 Billion Dollar Club members all grew in 2010. These firms managed an aggregate $309.27 billion as of January 1, 2011, up 15% from the combined $268.93 billion they controlled on January 1, 2010, and up 27% from the $243.6 billion managed on January 1, 2009.

Bridgewater Associates remains the largest American hedge fund and also posted the biggest asset gain in 2010, increasing its assets by a stunning $15.3 billion for a total of $58.9 billion under management. The strong performance of Bridgewater’s Pure Alpha Fund II, which gained 44.8% during 2010, powered much of this growth.

The number two spot again goes to JPMorgan Asset Management, which managed $45.5 billion as of January 1. That’s $7.1 billion more than the firm managed on January 1, 2010, with growth attributed to inflows into JPMorgan’s fund business.

Paulson & Co. repeats in the number three position with $36 billion in assets under management, $4 billion more than on January 1, 2010.

In dollar terms, the assets of D.E. Shaw Group fell more than any other firm last year. D.E. Shaw lost $9.37 billion, or nearly 40%, of its assets in 2010. The firm now manages $14.23 billion.

American hedge funds control the bulk of industry assets worldwide. By far, New York remains the central hub, accounting for $775.47 billion, or 60%, of assets managed by the Billion Dollar Club. Historically, firms based in the U.S. have managed about 75% of the world’s hedge fund assets.

TOP TEN HEDGE FUNDS IN THE AMERICAS
Firm                                                  AUM ($ billions)
Bridgewater Associates                                     58.9
JPMorgan Asset Management                                  45.5
Paulson & Co.                                              36.0
Soros Fund Management                                      27.9
Och-Ziff Capital Management Group                          27.6
BlackRock                                                  26.6
Baupost Group                                              23.4
Angelo, Gordon & Co.                                       22.0
Farallon Capital Management                                21.5
King Street Capital Management                             19.9     

(press release)

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