Total hedge fund industry assets increased by $215 billion in 2006 to $1.442 trillion, up 17.5% on a year earlier, according to hedge fund advisory group Hennessee.
Hennessee says preliminary results from its survey indicate that the hedge fund industry experienced net inflows of $75 billion (+6.1%) in 2006. The remaining $140 billion (+11.4%) was the result of positive performance, as measured by the Hennessee Hedge Fund Index, which advanced +11.4% in 2006.
Software provider PerTrac Financial Solutions says that the number of hedge funds listed in databases it tracks have increased by nearly two thirds since it last looked at the market in detail in 2005.
All hedge fund strategies had a good 2006, especially by comparison with the weaker performance of 2005, with the predictable exception (in a bull-market year) of short selling. Emerging markets did best, followed by event-driven and distressed securities.
The heads of global markets and investment banking at Merrill Lynch, Dow Kim and Greg Fleming, have predicted that the firm will earn three quarters of its investment banking revenues from outside the United States within five years.
Barclays Capital, the investment banking division of Barclays Bank PLC, is expanding its prime services business by teaming up with Orc Software, a provider of technology for advanced trading, market making and brokerage.
UBS reported last week that the costs of the well-advertised expansion of its investment banking business, including prime brokerage, wiped out profits in the fourth quarter of last year.
The Swiss bank says that, despite the rising costs of fulfilling its ambitions, 2007 had started well and it raised the dividend paid to shareholders.
Hedge fund advisors Hennessee Group say that the Hennessee Hedge Fund Index advanced +1.48% in January, while the S&P 500 advanced +1.41%, the Dow Jones Industrial Average rose +1.27%, and the NASDAQ Composite Index climbed +2.01%. Bonds were again the laggard in January, as the Lehman Brothers Intermediate Government Corporate Bond Index advanced +0.04%.
The number of major hedge funds launched in the United States in 2006 was lower than in 2005, which was itself a less fruitful year than 2004, according to the Absolute Return New Funds Survey for 2006, published in the February issue of Absolute Return magazine.
Morgan Stanley has added Singapore to Hong Kong and Tokyo operations as a centre of prime brokerage services in the booming Asain hedge fund market.
According to industry analysts Eurekahedge, Asian hedge fund managers are now looking after $140 billion of assets, and Singapore and Hong Kong are competing fiercely to attract them.
Erik Jens, currently Business Operating Officer within the Commercial and Private Banking division of Fortis Bank, has been appointed CEO of Fortis Prime Fund Solutions.
Prime Fund Solutions is part of the Fortis Merchant and Private Banking division (CFC) which brings together Fortis’s Brokerage, Clearing, Custody and Prime Fund Solutions entities, including the financing and administration services supplied to hedge funds.