Hedge Fund Assets Grew By $139 Billion In 2004

by Carla Johnson, Investors Offshore.com

14 January 2005

Figures released by hedge fund advisors Hennessee Group suggest that hedge fund sector grew by $139 billion in 2004, taking total assets to some $934 billion.

While preliminary results have indicated that hedge fund inflows reached $75 billion in 2004, Hennessee estimates that an additional $64 billion can be added to total assets as the result of positive performance by hedge funds last year, alternative investment news service Opalesque revealed.

The firm also estimates that the number of hedge fund managers increased further last year from around 7,000 to more than 8,000.

However, hedge fund inflows remain relatively insignificant when compared to mutual fund inflows, which are estimated at $180 billion for 2004, up from $152 billion in 2003.

"While hedge funds continued to gain interest from investors, a comparison between hedge fund and mutual fund assets reveals that hedge funds represent only a small share of the market," observed Charles Gradante, managing principal of the Hennessee Group.

"On the margin, hedge funds can make a difference with or without leverage. But with hedge funds approaching $1 trillion in invested assets and mutual funds nearing $8 trillion, it is mutual fund inflows and outflows that should be regularly highlighted as moving the broad markets, as they did in our last bear market when mutual funds experienced heavy redemptions,” Mr Gradante added.

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