Hedge funds gain 26% 2006

The hedge fund industry grew by a healthy 26% in 2006, despite energy market volatility and several hedge fund blowups, according to Hennessee Group LLC’s 2006 Hedge Fund manager survey. According to the results, the hedge fund industry closed out 2006 with $1.535 trillion in assets, compared with $1.223 trillion during the year-ago period. The growth was attributed to a 13% increased in management performance, while new inflows also rose 13%. The strong year came despite the collapse of Greenwich, Conn.-based hedge fund Amaranth Advisors LLC, which lost $6 billion due to bad energy trades last September (InvestmentNews, September 19) . "Despite the increase in assets and leverage throughout the industry, net exposures continue to remain fairly constant, indicating funds are finding a reasonable amount of short positions," said Mr. Gradante, according to a statement. The number of hedge funds grew by 7% from 8,900 to 9,550 funds. Individuals, family offices and fund of funds represented the largest sources of capital for hedge funds, comprising 32% of total industry assets, followed by endowments and foundations (13%), corporations (12%) and pensions (11%). The 2007 survey respondents include 605 hedge funds from 178 management companies representing over $342 billion in assets. Hennessee Group is based in New York.