Hedge Funds In The US

Written by Preqin

In this article we rank activity in the US hedge fund industry by state, and examine the make-up of investors and fund managers in the country.

The US remains a key driver of the hedge fund industry across the globe, accounting for 72% of the approximate $3.6tn in global assets as of 31 May 2018. Despite hedge fund activity in other regions globally expanding alongside that of the US, the country accounts for 3,405 of the 5,523 institutional investors active in hedge funds and 3,319 of the 5,383 active hedge fund managers tracked by Preqin.

All 50 US states are home to at least one institutional investor actively investing in hedge funds, and there are only two states that have no hedge fund managers operating within them. New York accounts for just under half of all US hedge fund industry assets; Connecticut is home to the two largest hedge fund managers in the world.

US-based Hedge Fund Investors

Pension funds are, by some distance, the largest aggregate allocator to hedge funds, contributing almost half of all institutional capital invested in the asset class by US-based institutional investors (Fig. 2). Over half of US-based funds of hedge funds are based in New York (Fig. 3), with the aggregate AUM of fund of funds managers headquartered in the state totalling $310bn. Blackstone Alternative Asset Management is the largest fund of hedge funds manager in the US and, indeed, the world, currently managing $75bn (as at May 2018).

US-based Hedge Fund Managers

Over one-third (36%) of all US-based fund managers are based in New York, while California and Texas are home to 15% and 6% respectively. Single-manager hedge funds account for a significant majority (76%) of US-based hedge funds, with funds of hedge funds, managed futures/CTAs and liquid alternative structures representing 13%, 6% and 3% respectively (Fig. 4).