Bleeding assets, hedge funds register with SEC

Feb 2, 2009 @ 2:35 pm

By Jeff Benjamin

The majority of hedge funds based in the United States are voluntarily registering with the Securities and Exchange Commission, according to Hedge Fund Research Inc. in Chicago.

Almost 55% of more than 2,000 United States-based hedge fund firms are registered with the SEC as of last Friday despite a lawsuit two years ago that overturned a rule requiring hedge fund managers to register as investment advisers.

The registered universe of hedge funds represents 71% of U.S.-based hedge fund assets, according to HFR.

HFR estimates there are more than 2,000 U.S.-based fund firms.

Nearly two-thirds of the money managed by funds of hedge funds is managed by SEC-registered funds, the report also stated.

HFR estimates total hedge fund industry assets to be $1.4 trillion following last year’s record outflows of $154 billion.

The carnage of 2008 was in stark contrast to 2007, when the hedge fund industry was flush with record inflows of $195 billion, according to HFR.

Through June of last year, when HFR measured the hedge fund industry at $1.9 trillion, the industry had grown 400% over the previous 10 years.

"It's tough to speculate on exactly why these firms are registering beyond that they certainly feel it is beneficial to be able to show clients they are registered," said Kenneth Heinz, president of HFR.

"What this research does is provide some clarity as to where the hedge fund industry is prior to any other regulatory requirements that might be coming," he added.

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