Hedge Fund Industry Assets Surge - HFR

Assets invested in the hedge fund industry increased by $100 billion in the second quarter of 2009, ending at $1.43 trillion, according to figures released by Hedge Fund Research (HFR). This is the first quarterly increase in assets since 2Q 08, when total industry capital peaked at $1.93 trillion.

The strong performance was led by strategies focusing on Emerging Markets, Convertible Arbitrage and Energy/Basic Materials. These three areas were among the weakest performers in 2008, showing the dramatic shift in market dynamics that has taken place this year.

Investors redeemed $42.8 billion from hedge funds in the second quarter, approximately 60% less than the $103 billion that was redeemed in 1Q 09 and an even more significant drop from the $152 billion that was withdrawn in 4Q 08.

Funds of Hedge Funds continued to experience a higher percentage of capital redemptions than single-manager strategies, as investors withdrew $33 billion from Funds of Hedge Funds in the second quarter. Total capital invested in hedge funds via Funds of Hedge Funds currently stands at $530 billion, 37 percent of the industry’s total capital and well below the $825 billion which were invested through Funds of Funds at their peak level in mid-2008.

HFR also reports that the number of hedge funds, including both single-manager and funds of funds, remained approximately flat during the quarter at just over 8,900. The performance of the HFRI Fund Weighted Composite is now available hedged into four foreign currencies, including Euro, British Pound Sterling, Swiss Franc and Japanese Yen.

"Reflecting the diverse drivers of hedge fund industry performance, recent gains have occurred in an environment in which developed equity markets have been essentially flat", Kenneth J. Heinz, President of Hedge Fund Research Inc, said. "Improved liquidity in credit markets contributed to narrowing some of the pricing dislocations that were created near the end of 2008, and the combination of improved credit markets, gains in emerging markets, and decreased risk aversion have driven broad-based gains in 2009."

Merlin Merger Provides Hedge Fund Managers Access to Network of Industry Experts

Hedge fund prime broker Merlin Securities and financial tech group Gerson Lehrman, announced an exclusive research partnership which will allow Merlin to provide emerging managers with access to Gerson Lehrman Group’snetwork of more than 200,000 experts. As a result of the partnership, Gerson Lehrman Group’s platform will be much more accessible to fund managers with assets of up to $150 million.

”We are very pleased to announce this exclusive partnership with Gerson Lehrman
Group,” Stephan Vermut, founder and managing partner of Merlin Securities, said,
”Gerson Lehrman Group is a trusted name and resource for generating alpha, and as
leaders in our respective markets, the combination of Gerson Lehrman Group’s worldrenowned expert network with Merlin’s prime, multi-prime and analytical solutions represents an extremely powerful offering for emerging managers.”

”The decision to offer services to emerging managers was a natural one,” Alexander Saint-Amand, president and chief executive officer of Gerson Lehrman Group, said, ”Like our current clients, emerging managers greatly value the sophisticated expertise offered through our global network. We are excited to be working with Merlin as our partner in providing Gerson Lehrman Group services to emerging managers.”

Merlin was recognized as the #1 prime broker for funds less than $1 billion by Alpha
magazine’s 2008 hedge fund service provider survey for the second year running. Merlin was also the top-ranked non-algorithmic-driven firm and second overall among brokerages trading NYSE stocks as measured by arrival price, according to the 2008 Elkins/McSherry annual transaction cost survey.