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This IFSL report provides an overview of the global hedge funds industry with particular emphasis on London’s role as the second largest global centre for hedge funds.. The number of hed

Trang 1

Source: IFSL estimates

Chart 1 Global hedge funds

Number (line)

$bn assets (bars)

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200

4,000 6,000 8,000 10,000 12,000

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

OVERVIEW

Global hedge fund assets under management posted strong gains for much of

2009 following sharp falls seen in the previous year due to conditions brought

about by the global economic downturn This IFSL report provides an

overview of the global hedge funds industry with particular emphasis on

London’s role as the second largest global centre for hedge funds

Assets under management of the hedge fund industry increased by 13% in

2009 to $1,700bn1(Chart 1) This followed a 30% decline in the previous year

Redemptions continued for the second year running, albeit at a slower pace

The 19% return in 2009, the best hedge funds’ performance in a decade, more

than made up for the $85bn in net outflows The number of hedge funds

totalled around 9,400 at the end of the year, a reduction of more than 1,000

from the peak seen two years earlier New hedge fund launches however

exceeded the number of liquidations in the second half of 2009 Growth of

hedge fund industry assets is likely to continue in 2010 barring further

economic turbulence or major regulatory changes

The fund of hedge funds industry has been particularly affected by the

economic downturn and the reputational damage following the revealing of the

Madoff fraud in 2008 Assets of fund of funds totalled around $500bn at the

end of 2009, down 17% from the previous year, and over 40% below the peak

seen two years earlier The proportion of single manager hedge fund assets

originating from fund of funds fell to 30% in 2009 from 40% a year earlier

Flow of funds The surge in redemptions which started in the latter part of 2008

continued in the first half of 2009 Some hedge funds were forced to suspend

redemptions because selling illiquid assets would have exposed the remaining

investors to bigger potential losses Firms more oriented towards institutional

investors have fared better in this environment as institutional investors have

been less inclined to redeem assets More than a half of impaired assets at the

end of 2008 were returned to standard liquidity terms by the end of 2009

(Chart 2) The asset raising environment slowly improved during 2009 with a

return to net asset inflows in the second half of the year (Chart 3)

Location of management The US was the largest management centre for

hedge funds with 68% of the total at the end of 2009, down from 82% a decade

earlier Europe followed with 23% and Asia 6%

New York is the world’s leading centre for hedge fund managers, followed by

London IFSL estimates that around 41% of global hedge fund assets were

managed from New York in 2009, down from over 50% at the start of the

decade London’s 20% share of the global total was unchanged from the

previous year London is by far the largest centre in Europe for the management

of hedge funds At the end of 2009, three-quarters of European hedge fund

assets totalling nearly $400bn were managed out of the UK, predominantly

from London The UK is also a leading centre for hedge fund services such as

administration, prime brokerage, custody and auditing

1 Estimates of the size of the hedge fund industry vary due to restrictions imposed on advertising and

0 29 58 87 116 145 174

Impaired assets Assets returned to

standard liquidity terms

Q4 2009 Q3 2009

Q2 2009 Q1 2009

86%

59% 46%

29%

14%

41% 54%

71%

1 $174bn global assets estimated as impaired at end-2008

Source: Credit Suisse / Tremont Hedge Index

Chart 2 Liquidation of impaired assets

$bn

Trang 2

THE GLOBAL HEDGE FUNDS

INDUSTRY

Assets under management of the hedge

fund industry increased by 13% in 2009

to $1,700bn (Chart 1) This follows a

30% decline in the previous year

Redemptions continued for the second

year running, albeit at a slower pace

Strong performance in 2009 however

more than made up for the $85bn in net

outflows

Flow of funds The surge in redemptions

which started in the latter part of 2008

continued in the first half of 2009

Hedge funds more oriented towards

institutional investors have fared better in this environment as they have been

less inclined to redeem assets Some hedge funds were forced to suspend

redemptions towards the end of 2008 because selling illiquid assets would have

exposed remaining investors to bigger potential losses More than a half of

these impaired assets were returned to standard liquidity terms by the end of

2009 (Chart 2) The asset raising environment slowly improved during 2009

with a return to net asset inflows in the second half of the year (Chart 3)

Number of hedge funds The number of hedge funds totalled around 9,400 at

the end of 2009 Three-quarters of these were single manager hedge funds and

the remainder fund of hedge funds This 2009 total represents a reduction of

more than 1,000 from the peak seen two years earlier (Chart 4) The fall was

caused by funds closing due to losses, lack of liquidity and redemptions as

investors looked for safer investments New hedge fund launches however

exceeded the number of liquidations in the second half of 2009

Employment According to the Alternative Investment Management

Association (AIMA), the UK hedge fund industry employs around 40,000

people Around 10,000 of these are directly employed by hedge funds and the

remainder among the industry’s advisers and service providers The hedge fund

industry employs some 150,000 people worldwide

Geographical distribution of hedge funds

Domicile of fund Hedge funds can be registered in onshore or offshore

locations Around 60% of the number of hedge funds in 2009 were registered

in offshore locations The Cayman Islands was the most popular registration

location and accounted for 39% of the number of global hedge funds It was

followed by Delaware (US) 27%, British Virgin Islands 7% and Bermuda 5%

Around 5% of global hedge funds are registered in the EU, primarily in Ireland

and Luxembourg

Location of management Hedge funds are predominantly managed from

onshore locations The US is by far the leading location for management of Source: IFSL estimates

Chart 5 Management location of global

hedge fund assets

% share of assets under management

0 20 40 60 80 100

2009 2008 2007 2006 2005 2004 2003 2002

US Europe Asia Other

82%

68%

1%

3%

23% 12%

Source: IFSL estimates

Chart 3 Net asset flow

$bn

-300 -250 -200 -150 -100 -50 0 50 100 150 200 250

Net asset flow

2009 2008 2007 2006 2005 2004 2003 2002 2001

-150 -100 -50 0 50 100 150

q4 q3 q2 q1 q4 q3

2009 2008

Returns

Source: IFSL estimates

Chart 4 Hedge fund launches and

liquidations

Number

-1,500 -1,000 -500 0 500 1,000 1,500 2,000 2,500

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Launched Liquidated

Trang 3

hedge fund assets with over two-thirds of the

total Its share, however, was well below its

80% share at the start of the decade Europe

doubled its share during this period (Chart 5)

New York is the world’s leading centre for

managers of hedge funds, followed by

London IFSL estimates that 41% of global

hedge fund assets were managed from New

York in 2009, down from over 50% at the

start of the decade (Chart 6) London’s

20% share of the global total was unchanged

from the previous year A breakdown by

management location of the largest 100

hedge funds shows that New York

accounted for 47% of assets in 2009,

followed by London 21%, Boston 7% and

Greenwich 6%

London is much the largest centre in Europe

for the management of hedge funds

According to Eurohedge data, at the end of

2009, 76% of European single manager

hedge fund assets totalling $382bn were

managed out of the UK, the vast majority

from London (Chart 7) London’s share was

up slightly from 75% in the previous year If

fund of funds’ assets are taken into account,

London probably accounts for close to 90%

of hedge funds assets managed in Europe

There were nearly 1,400 European-based

hedge funds in 2009, of which two-thirds

were located in London Other important

locations for hedge fund managers in

Europe include France, Switzerland and

Sweden

Many hedge funds in Europe have recently launched UCITS III compliant

stand-alone onshore fund vehicles which are allowed to be distributed

throughout the EU to institutional and retail clients These funds employ a

range of strategies that use derivatives and limited leverage within a regulated

framework A Deutsche Bank survey recorded a 50% growth in 2009 of UCITS

assets under management and

found that 35% of investors in its

survey plan to allocate to such

funds in 2010 The UK is the

dominant centre in this area and

accounts for about a half of

assets under management and

number of funds (Table 1)

average annual return, %

Chart 8 Global hedge fund returns

-15 -10 -5 0 5 10 15 20 25 30

2009

2008 2007

2006 2005

2004 2003

2002 2001

2000 1999 1998

Other US Netherlands France Switzerland Sweden

UK

0 100 200 300 400 500 600

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Source: Eurohedge

Chart 7 European based hedge funds market

% share, 2009

76% 5%

Total: $382bn

2%

2% 9%

4%

0 500 1,000 1,500

2,000 Assets $bn

Number of funds

Source: IFSL estimates

Chart 6 Top hedge fund cities

% share of total hedge fund assets by location of manager

0 5 10 15 20 25 30 35 40 45 50 55

New York London

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Other San Francisco Wesport Greenwich Boston

London

New York

47%

3%

4%

6%

7%

21%

11%

% share of largest 100 hedge funds assets by location of manager

Source: Hedgefund Intelligence

Table 1 UCITS Absolute Return Funds

UK France Luxembourg Sweden Italy Others Total

$bn, assets

14.4 4.6 4.4 2.3 1.1 3.5 30.3

72 21 9 3 3 38 146

Trang 4

slowdown, London retains its structural advantages which make it an attractive

location for hedge fund management These include its local expertise, the

proximity of clients and markets and a strong asset management industry

London is also a leading centre for hedge fund services such as administration,

prime brokerage, custody and auditing With around a half of European

investment banking activity conducted through London, it is a natural location

for prime brokerage services

Asia, and more particularly China, is taking on a more important role in the

global hedge fund industry more as a source of funds than a location for

management The UK and the US are leading locations for management of

Asian hedge funds’ assets with around a quarter of the total each Other

important centres include Hong Kong, Australia, Singapore and Japan

HEDGE FUNDS’ RETURNS AND INVESTMENT STRATEGIES

Hedge funds’ 2009 return globally averaged 19%, the highest for a decade

(Chart 8) This comes just one year after hedge funds posted the worst

annual loss in history brought about by the falls in equity markets, a ban on

short-selling and pressure to liquidate positions to meet margin and redemption

calls As market conditions improved in 2009 and equity markets recovered,

hedge funds saw positive performance across most strategies The 2009 return

was lower than the 27% return on the MSCI World Index but much higher than

the 6.9% of the Barclays Capital Global Aggregate Bond Index

Hedge funds investment strategies vary enormously Strategies may be

designed to be directional (which try to anticipate market movements) or

market-neutral (which have low correlation to the market movements) Equity

long/short strategies typically account for the leading share of strategies While

nine out of ten of the most common investments strategies saw a net outflow

of funds in the first half of 2009, only four experienced outflows in the second

half of the year Long/short equity, event driven, managed futures saw the

biggest inflows in the second half of the year (Chart 9)

SOURCES OF FUNDS

Institutional investors are the biggest source of

capital for hedge funds, having overtaken high net

worth individuals in 2008 Funds with a higher

proportion of institutional investors fared better in

market conditions of falling liquidity in 2008 and

the early part of 2009 A breakdown of institutional

investors by type of investor shows that fund of

hedge funds accounted for 24% of assets, followed

by public pension funds 17%, endowment plans

14% and private pension funds 14% (Charts 10 and

11) The geographical breakdown of institutional

investors shows that more than a half originate in

the US, followed by the UK 14% and Switzerland

5%

Fund of hedge funds’ assets totalled around $500bn

or some 30% of global hedge fund assets This was Source: Preqin

Chart 11 Institutional investors in hedge funds

% share, 2009

Other Asset managers

Family offices

Private pension funds

Endowment plans

Public pension funds

Fund of hedge funds 24%

6%

13%

14%

14%

17%

12%

Other

Germany Canada Australia Switzerland

UK

US 52%

2%

3%

3%

5%

14%

20%

by type of investor by originating country

-30 -25 -20 -15 -10 -5 0 5 10

H2-2009 H1-2009

Multi-Strategy Managed Futures Long/Short Equity Global Macro Fixed Income Arbitrage Event Driven Equity Market Neutral Emerging Markets Dedicated Short Bias Convertible Arbitrage

Source: Credit Suisse/Tremont Hedge Fund Index

$bn

Chart 9 Asset flows by sector

-4.8

-6.1

6.7 -26.5

2.2 -0.4 0.7 -6.0 0.1 -0.7 -0.9

-1.3 -6.5

1.8 -20.6

7.1 0.2 2.9 -1.7 -19.5

0 10 20 30 40 50 60 70 80 90 100

2009 2007 2005 2003 2001 1999

Source: Hennessee Group LLC

Chart 10 Global hedge funds by source

of capital

Endowments and foundations

Pension funds Fund of funds

Individuals

18%

54%

8%

10%

% share

29%

26%

14%

19%

Corporations

31%

31%

12%

14%

12%

30%

44%

7%

12%

7%

24%

44%

8%

15%

9%

20%

48%

8%

15%

9%

Trang 5

down 17% from the previous

year and nearly a half below the

peak seen two years earlier

(Charts 12 and 13) The value of

the industry’s assets began to fall

in mid-2008 as investors began

converting their investments into

cash due to widespread losses in

the hedge funds industry The

fall in reputation of the industry

following the revealing of the

Bernard Madoff fraud in 2008

also contributed to the decline Adding to this, fund of hedge funds

significantly underperformed hedge funds in 2009 with around 10% in returns

in 2009, much less than the 19% made by the hedge funds industry

The breakdown of hedge funds of funds by manager location shows that around

a quarter of assets were managed from the UK The US was the most popular

location with around 30% of the market Switzerland, France and Hong Kong

were also important centres To deal with the decline in assets many fund of

funds were forced to reduce management and performance fees in order to

attract new investments and retain existing customers The number of

publicly quoted hedge fund of funds has increased over the past decade Most

of these listings are on the London and Zurich exchanges The London Stock

Exchange overtook Zurich in 2006 to become the location of choice for funds

of hedge funds listings

Secondary market for hedge funds is a market where investors can buy into

some hedge funds at a discount to net asset value This is an OTC market where

each deal is individually priced and structured The secondary hedge funds

market allows investors to sell stakes in funds that have lockups or have

limited redemptions It also lets others into funds that aren't accepting new

investors As record investor redemptions swept over the industry in late 2008

and restrictions on redemptions imposed by some hedge funds increased, many

investors turned to the secondary market to try to sell their stakes In December

2009, Hedgebay, one of the leading players in secondary market-making for

hedge funds, saw its global hedge funds secondary market index drop to a

record low, to just under 80% of the average net asset value

LARGEST HEDGE FUNDS

The hedge fund industry has become more concentrated at the top end over the

past decade With fund closures on the rise and new launches on the decline for

much of 2008 and 2009 consolidation intensified The industry will probably

be characterised by a greater concentration of assets in the large funds in the

next few years The top 100 hedge funds accounted for around 70% of total

industry assets in 2009, up from 54% in 2003 (Chart 14) JP Morgan was the

largest hedge fund with $50bn under management in January 2010 (Table 2) It

was followed by Bridgewater Associates $44bn and Paulson & Co $32bn The

8% hedge fund attrition rate in 2009 was down on the previous year but much

higher than the 3% to 5% range seen over the previous 10 years (Chart 15)

Sources: IFSL estimates

% share

Chart 13 Single-manager hedge fund capital

provided by funds of hedge funds

0 5 10 15 20 25 30 35 40

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Source: IFSL estimates

% share, 2009

Chart 14 Concentration of hedge fund

assets

0 20 40 60 80 100

Assets Funds

99%

1%

30%

70%

Sources: IFSL estimates

$bn, assets under management

Chart 12 Global Fund of Hedge Funds

industry

0 100 200 300 400 500 600 700 800 900

Number of funds

1,000 1,500 2,000 2,500 3,000 3,500

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Source: Hedgefund Intelligence

Table 2 Largest hedge funds

1 JP Morgan

2 Bridgewater Associates

3 Paulson & Co.

4 Brevan Howard Asset Management LLP

5 Soros Fund Management

6 D.E Shaw Group

7 Och-Ziff Capital Management Group

8 Baupost Group

9 Man AHL

10 Angelo, Gordon & Co.

$bn

50.4 43.6 32.0 27.9 27.0 23.6 23.5 21.8 21.7 20.8

Largest hedge funds (January 2010)

Trang 6

PROVIDERS OF SERVICES TO HEDGE FUNDS

Prime brokers offer brokerage and other professional services to hedge funds

and other large institutional customers Rather than providing particular niche

services, prime brokers offer a diverse range of services including: financing,

clearing and settlement of trades, custodial services, risk management and

operational support facilities (Chart 16) The bulk of prime brokers’ income

comes from cash lending to support leverage and stock lending to facilitate

short selling, both areas that have been affected to a large extent in 2008 and

early part of 2009 by redemptions and a general decline in hedge funds’

leverage levels London is Europe’s leading centre for prime brokerage

services and accounts for more than 90% of its activity, as the largest

investment banks that provide these services are either headquartered or have

a major office there

Major restructuring occurred amongst prime brokers in 2008 and 2009

such as the acquisition of Bear Stearns by JP Morgan, the takeover of Lehman

Brothers by Barclays Capital and the acquisition of Merrill Lynch by Bank of

America This resulted in a shift in market share from some former investment

banks to commercial banks Goldman Sachs and JP Morgan were the largest

prime brokers in 2009 each with around a fifth of the market Morgan Stanley

saw the biggest decline in its market share, dropping to 13.5% in 2009 from

20% in 2008 (Table 3) According to the Financial Services Authority, the

average margin requirement of prime brokers increased from around 25% in

2007 to nearly 40% in October 2009 (Chart 18) This is likely to drop in 2010

as liquidity continues to return to the industry Hedge funds leverage increased

to an average of around 1.50 in 2009 from 1.10 in 2008, almost back to levels

in the years preceding the credit crisis (Chart 19)

Fund administrators The extent to which hedge fund managers outsource

administrative functions such as accounting, investor services or risk analysis

varies widely Assets under administration by third-party hedge fund

administrators fell by around 2% in the first half of 2009 following a 30% fall

in 2008 Citco Fund Services retained its position as the largest hedge fund

administrator despite a 9% fall in assets under management in the second half

of 2009 to $340bn It was followed by State Street Alternative Investment

Solutions and The Bank of New York Mellon (Table 4) There may be an

increase in the outsourcing of administrative functions in the coming years as

hedge funds will be looking to reassure their clients due to the fall in reputation

of the industry following the Madoff fraud and the

suspension of redemptions by a number of funds in the

latter part of 2008

Managers of offshore hedge funds typically rely on offshore

administrators for various types of services and operational

support In addition to helping set up the offshore fund,

offshore administrators may also provide accounting and

reporting services; offer advice on an ongoing basis with

reference to complying with applicable laws; or offer

independent pricing of a fund’s portfolio of securities Some

offshore locations may subject the administrators to

licensing and auditing requirements

Source: Banking Supervision Comittee, ECB

Chart 16 Types of services provided to

hedge funds by prime brokers

% share of banks surveyed providing a service, 2004

0 10 20 30 40 50 60 70 80 Credit lines

Capital introduct.

Risk Management Custody services Fund administ.

Clearance & settl.

Trade execution Cash lending

45%

40%

40%

30%

25%

20%

50%

55%

Sources: Hennessee Group; IFSL estimates

% share

Chart 15 Hedge fund attrition rates

0 2 4 6 8 10 12 14

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

1 Dashed lines indicate optional relationships

Sources: AIMA and ASSIRT Hedge Fund Booklet

Chart 17 Structure of a typical hedge fund

Investors

Custodian Hedge fund

Fund Administrator

Hedge Fund Manager Prime broker/dealer

Trang 7

Custody Hedge fund assets are

generally held with a custodian,

including cash in the fund as well

as the actual securities The flow

of capital capital to meet margin

calls may also be controlled by

custodians

Auditing Most hedge funds are

set up in a way that does not

require them to have their

financial statements audited

Some hedge funds however, may undergo annual audits if this is a part of the

contract between the hedge fund and its investors This may however change if

regulation of hedge funds is tightened Some offshore locations require hedge

funds to have their accounts audited

REGULATION OF HEDGE FUNDS

The hedge fund industry has faced calls for stricter regulation in recent years

Although hedge funds did not play a major role in the emergence of the credit

crisis it is alleged that they contributed to volatility through short-selling

transactions and selling shares as a result of deleveraging and redemptions The

Financial Stability Board, successor to the Financial Stability Forum, was

established in April 2009 following the G-20 London summit The oversight of

the new body was extended to all financial institutions important to global

financial stability including for the first time large hedge funds

In the US, hedge fund managers have not been subject to regular SEC

(Securities and Exchange Commission) oversight Rule changes introduced by

the SEC in February 2006 that required hedge fund managers to register under

the Investment Advisers Act were overturned by the federal court in the same

year Since then US hedge fund managers who registered with the SEC have

done so voluntarily The Private Fund Investment Advisers Registration Act

2009 will make the registration of hedge fund managers in the US mandatory

It will also subject hedge funds to new reporting and record keeping

requirements In October 2009 the House Financial Services Committee voted

in favour of the Bill The Bill will be presented to the House of Representatives

in 2010 and if it passes it will move onto the Senate and eventually to the

President to sign into law

Domestic regulation of hedge funds varies across Europe In April 2009, the

European Commission published its proposal for a Directive on Alternative

Investment Fund Managers (AIFMD) to establish EU-level regulation It is

now being considered by both the European Parliament and the Council of

Ministers The impetus for the Directive came from the G20 summit in London

which set the path for hedge fund regulation, with G20 leaders agreeing that

hedge fund managers should be registered by their national regulators and

should report systemically relevant data to those regulators While the industry,

led by the global hedge fund body AIMA, is supportive of those goals,

international concern has been expressed by the marketing provisions of the

Directive which could effectively prevent non-EU funds and managers from

accessing the EU market and thus prevent EU investors from investing outside

Sources: Financial Services Authority

% margin requirement

Chart 18 Average margin requirement

0 5 10 15 20 25 30 35 40 45

Oct-09

Apr-09 Oct-08

Apr-08 Oct-07

Apr-07 Oct-06

Apr-06 Oct-05 Apr-05

Source: Hennessee Group LLC, Financial Services Authority, IFSL estimates

Gross market exposure as a

% of assets under management, end-year

Chart 19 Hedge funds use of leverage

100 110 120 130 140 150 160 170

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Source: HFN - Hedge Fund Administrator Survey

Table 4 Largest hedge fund administrators

end-June 2009 Citco Fund Services State Street Altern Invest Solutions The Bank of New York Mellon Goldman Sachs Admin Services Citi

HSBC Securities Services SS&C Fund Services CACEIS Investor Services GlobeOp Financial Services Fortis Prime Fund Solutions

$bn

340 208 159 156 129 123 100 84 81 81

Growth from

2008 (%)

-9 -14 7 -14 -14 -16 0 -8 -8 -27

Source: Eurekahedge

Table 3 Largest hedge fund prime brokers

Goldman Sachs

JP Morgan Morgan Stanley UBS

Deutsche Bank Citigroup Credit Suisse Newedge Financial Merrill Lynch Others

Jan-2009

% share

19.1 18.8 13.5 6.9 6.6 5.5 5.5 2.8 2.7 18.6

Jan-2008

% share

18.5 -20.0 7.8 5.9 4.2 4.0 -2.9 36.7

Trang 8

the EU The Directive could be agreed this summer, although it would take

several years to implement

UK hedge fund managers and advisors are typically required to seek

authorisation from the Financial Services Authority (FSA) The regime for

hedge fund managers in the UK is similar to that which applies to other

investment managers They are able to take advantage of the Investment

Services Directive which allows them to offer their investment services to

clients in other countries within the EEA The FSA oversees a group of the

largest hedge fund managers from within a specialist supervisory team The

FSA also specifies restrictions on sales and marketing of hedge fund

products Hedge fund products for example, cannot be marketed to the

general public but UK investors can deal directly with offshore funds

Offshore hedge funds are registered in tax neutral jurisdictions allowing

investors to minimise their tax liabilities Offshore hedge funds are usually

structured as corporations although may sometimes be limited partnerships

Generally the number of investors is not restricted Onshore hedge funds

often set up a complementary offshore fund to attract additional capital

without exceeding limits on the number of investors The vast majority of

offshore funds are registered in the Cayman Islands followed by the British

Virgin Islands and Bermuda (Chart 17)

-LINKS TO OTHER SOURCES OF INFORMATION:

www.hedgefundsreview.com www.hedgefundsworld.com

www.hedgefund-index.com www.hedgefundintelligence.com

www.thehedgefundjournal.com www.institutionalinvestor.com

Data files

Datafiles in Excel format for all charts and tables published

in this report can be downloaded from the Reports section of

IFSL’s website www.ifsl.org.uk

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This brief is based upon material in IFSL’s possession or supplied to us, which we believe to be reliable Whilst every effort has been made to ensure its accuracy, we cannot offer any guarantee that factual errors may not have occurred Neither International Financial Services, London nor any officer or employee thereof accepts any liability or responsibility for any direct or indirect damage, consequential or other loss suffered by reason of inaccuracy or incorrectness This publication is provided to you for information purposes and is not intended as an offer or solicitation for the purchase or sale of any financial instrument, or as the provision of financial advice.

IFSL Research:

Report author: Marko Maslakovic

Director of Economics: Duncan McKenzie

d.mckenzie@ifsl.org.uk +44 (0)20 7213 9124

Senior Economist: Marko Maslakovic

m.maslakovic@ifsl.org.uk +44 (0)20 7213 9123 International Financial Services London 29-30 Cornhill, London, EC3V 3NF

www.ifsl.org.uk

-International Financial Services London (IFSL) is a private sector organisation, with nearly 40 years experience of successfully promoting the exports and expertise of UK-based financial services industry throughout the world This report on Hedge Funds is one of 16 financial sector reports in IFSL’s City Business Series All IFSL’s reports can

be downloaded at www.ifsl.org.uk.

© Copyright April 2010, IFSL

International Financial Services, Londonis a private sector organisation, with nearly 40 years experience of promoting the UK-based financial services industry through-out the world.

City of London Corporationadministers and promotes the world’s leading international finance and business centre and provides free inward investment services.

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