US Hedge Fund Assets Reach $2.58 Trillion

Growth of holdings climbed 8% last year, Preqin data indicate.

US hedge fund assets grew almost 8% last year, to $2.57 trillion, and inched up to $2.58 trillion in this year’s first quarter, Preqin researchers said.

The increase last year came amid very strong performance for hedge funds, as almost all markets—and equities in particular—enjoyed strong returns. The first quarter of 2018, when assets moved up just 0.4%, proved more challenging, as the US stock market had a 10% correction during the winter.

Nonetheless, Preqin has an optimistic view for this year as a whole. “Indications for 2018 are for sustained growth despite lackluster performance,” the firm said in a statement.

Public pension funds remain the biggest investors in hedge funds, with $302 billion allocated, Preqin said. This total has continued to increase, despite redemptions from other types of investors. Sovereign wealth funds, insurers, and asset managers have seen their assets in hedge funds drop.

The US has 62% of its institutions investing in hedge funds actively. And 72% of global hedge assets, or $2.63 trillion, are with American hedge operators. “With so much of the industry located in the US, the development of the industry here is likely to dictate growth across the globe,” said Amy Bensted, Preqin’s head of hedge funds.

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