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Alternative Market Briefing

Hedge fund industry losses hit administrators hard, but providers should participate in recovery thanks to investor demands

Tuesday, October 27, 2009

From Kirsten Bischoff, Opalesque New York:

The recently released 2009 edition of the Carbon360° Fund Administrator Fact Book, reveals how the landscape of the hedge fund industry has drastically changed over the past two years. Researchers at Carbon360° provided Opalesque with a list of the top 40 hedge funds (according to assets under administration), which showed how plunging assets effected administrators both large and small.

The top five represent $1,296tln of the 2.8tln assets administered by third party service providers. Reflective of the wide asset drop-off across hedge funds, four of the top five firms lost significant assets from 2008 to 2009, with only third-ranked SEI increasing its assets by 18.5% (from $173bn to $205bn).

The largest percentage gain of assets belonged to Northern Trust, which jumped from $44bn to $84.5bn (+90.3%) and the largest percentage loss hit HSBC Securities Services, which declined from $324bn to $173bn (a 46% drop).

Optimistic outlook for administrator recovery While service provider assets have fallen off along with the assets in the hedge fund industry, third party administrators remain well positioned to grow as hedge fund investors reallocate. The most important trend spurring this growth will come from investor demands that hedge fund utilize third party administrators. ......................

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