JP Morgan hedge fund assets soar 66% in half-year

JP Morgan hedge fund assets have rocketed 66% in a record half year, propelling it to the top spot in the sector, as the largest US firms benefited from an unprecedented wave of inflows on the cusp of the credit squeeze.


JP Morgan’s Highbridge Capital Management helped boost the bank’s assets under management to $56.2bn (€40.6bn) in the first half of the year, compared to $34bn for all of last year, according to a survey by industry publication Absolute Return.

Goldman Sachs Asset Management followed with a 23% jump as of June 29 to almost $40bn.

Och-Ziff, which has been preparing for a flotation, overtook Renaissance and Farallon to seize fifth place. The hedge fund's assets leaped 39% to $29.2bn, boosted by new capital investment. The increase was consistent with the dramatic 40% average annual growth in the hedge fund manager's assets.

Hedge fund inflows for the first half of the year rose 23% to $273bn, over the same period in 2006, the survey said.

The 246 largest hedge fund firms managed combined assets of $1.45 trillion as of July 1, according to the report. Consultants say the focus on building asset growth reflects a trend by managers who see it as the way to maintain or increase their fee income and offset a fall in investment returns over the long term, while stabilising their earnings.

In the first half of the year, hedge funds milked the market by opening up funds to new capital, even those that had been closed for years, a fund of hedge fund managers told Financial News in July.

Tudor Investment Corporation reopened funds for the first time in years in July, and cut the length of time that investors were required to stay in the fund from two years to three months.

Separately, two hedge fund indices were down in August across several strategies, indicating the toll of illiquidity on the credit market. Hedge funds lost 1.31% in August with declines across emerging market, high yield and macro strategies, according to Hedge Fund Research.

Hennessee Group, an adviser to hedge fund investors, said the Hennessee Hedge Fund Index suffered a 0.72% decline in August, although it remains 8% up for the year to date.

The Hennessee Global/Macro Index showed the most dramatic drop with a 1.87% decline in August, despite being up 9.2% for the year to date, and concluded that risk aversion had spread internationally, particularly in Asia.

The Hennessee Long/Short Index was up nearly 1% in August continuing 8.2% growth for the year to date, making it the one marginal bright spot in an otherwise challenging month.

Lee Hennessee, Hennessee Group managing principal, said: "It was generally a sub-par month for hedge funds, although losses were not nearly as heavy as many had speculated."
Source: efinancialnews.com