Survey: Top Hedge Funds Reach New Heights

Top hedge fund assets surpassed the $1.6 trillion mark at the beginning of 2008, according to a recent survey. And venerable firm JPMorgan remained at the top of the growing heap.

Assets of the biggest U.S. hedge funds in 2007 increased 34 percent over the prior year’s total — despite three of the 10 largest hedge fund firms losing $24 billion in assets during the second half of the year.

As of January 1, the biggest U.S. hedge fund firms managed combined assets of $1.605 trillion, according to the just-released biannual survey published by Absolute Return magazine, a unit of HedgeFund Intelligence.

Assets of the 262 hedge fund firms that manage $1 billion or more, known as the Absolute Return Billion Dollar Club, increased by $407 billion, or 34 percent. That’s $60 billion more than their gain in 2006 and greater than any one-year increase since Absolute Return began tracking industry assets in 2003. During the second half of the year, however, fund assets increased by only 10 percent, the smallest half-year increase since the survey began.

JPMorgan (including JPMorgan Asset Management and Highbridge Capital Management) remains the biggest U.S. hedge fund manager, with $44.7 billion. While that number is down from JPMorgan’s $56.2 billion total last July, the firm’s assets are significantly higher than the $34 billion held last January. JPMorgan’s assets are $8.7 billion higher than the second- and third-place firms, Bridgewater Associates and Farallon Capital Management – both of which now manage $36 billion.

Rounding out the top five, Renaissance Technologies rose to fourth place with $34 billion, a 41.67 percent increase, while Och-Ziff Capital Management rose one spot to fifth place, with $33.2 billion, an increase of 58.10 percent.

The biggest winner was Paulson & Co., which joined the top 10 for the first time after assets increased nearly 306 percent during 2007 to end the year at $29 billion. The biggest loser of 2007 was Goldman Sachs Asset Management, which fell to seventh place from second as assets dropped 27% in the second half to end the year at $29.20 billion. Since July, Goldman, JPMorgan and D.E. Shaw all lost hedge fund assets. D.E. Shaw fell to sixth place, from third.

The Absolute Return Billion Dollar Club is the only survey of U.S. hedge fund assets that whenever possible focuses on the aggregation of Jan. 1 data, which includes the most recent redemptions and allocations, thereby making the survey more current and accurate than those focusing on Dec. 31 numbers.