| The Global Billion Dollar Club |
| Where the managers are located |
| City |
Number of $bln firms |
Jan 2007 Assets $bln |
| New York |
123 |
649.78 |
| London |
72 |
261.00 |
| Greenwich, CT |
20 |
102.97 |
| Boston |
13 |
66.96 |
| San Francisco |
12 |
63.25 |
| Dallas / Fort Worth |
8 |
29.70 |
| Los Angeles |
8 |
16.98 |
| Stamford, CT |
6 |
25.30 |
| Paris |
6 |
20.97 |
| Sydney |
5 |
21.22 |
| Tokyo |
5 |
10.42 |
| Hong Kong |
5 |
9.53 |
| Bermuda |
4 |
12.41 |
| Westport, CT |
3 |
38.80 |
| Boca Raton, FL |
3 |
7.24 |
| Stockholm |
3 |
7.12 |
| Houston |
3 |
6.00 |
| Minnetonka, MN |
2 |
12.10 |
| Atlanta |
2 |
4.86 |
| Milwaukee, WI |
2 |
4.64 |
| Harrison, NJ |
2 |
4.59 |
| Moscow |
2 |
4.30 |
| Oslo |
2 |
3.62 |
| Other |
48 |
180.05 |
| * Firms with multiple headquarters counted once for each centre but with assets evenly split |
| Source: Absolute Return, EuroHedge, AsiaHedge and South AfricaHedge databases and surveys |
A steady stream of stories in recent weeks indicates that London looks to be mounting an ever-stronger challenge to New York’s traditionally dominant position as the leading centre of global hedge funds. From small beginnings only a few years ago, the growth of assets of London-based firms has indeed been impressive. And the outlook for managers based in the UK continues to look quite positive, notwithstanding some lingering concerns about the tax system – which is raising the prospect of more serious competition from other European centres, such as Switzerland.
Nonetheless, the notion that London is already a serious rival to New York looks somewhat premature. For one thing, the latest statistics on the size and shape of the industry – which we revealed last month in our first-ever HedgeFund Intelligence Global Review – still show New York has a long lead over London. Our new Global Billion Dollar Club revealed that more than one-third of that elite group – 123 firms out of a global total of 351 – are headquartered in New York, with combined assets of $623 billion. London is the second biggest centre, with 72 Billion Dollar Club members headquartered there, but they are still a long way behind on assets, with a combined total of $261 billion.
International centre
According to the latest full asset survey by EuroHedge, counting all of the firms based in Europe – including all the smaller players in the sub-billion dollar bracket, too – total assets managed by all the hedge fund firms headquartered in the UK now come to about $360 billion. This does represent a dominant position in the European time zone – about 78% of the assets of European hedge funds, with the second biggest centre, Paris, gaining market share but still a long way behind at about 6%.
The method used to compile our statistics might, however, significantly understate the importance of London. As our survey confirmed, a large number of US-based firms – more than 100 – also now have European offices, and mostly in London. And the money they manage from London is not counted in the EuroHedge statistics unless they run dedicated European funds. In practice, only a minority of these big US firms do operate European funds – and so assets run from London by the others are not captured in the statistics. And if, for the sake of argument, an average of, say, 20% to 25% of their assets are now being run from London, then a case might be made that London is indeed getting close to New York as the top hedge fund centre.
London does enjoy some obvious advantages. Its position in the global time zones, with trading hours that overlap Asia in the morning and the US in the afternoon, make it ideal for dealing in global asset classes such as currencies, government bonds and commodities. Its heritage as a major banking and financial centre also creates a fertile breeding ground for trading talent in these asset classes required to manage hedge funds. And the UK has benefited from a generally benign, light-touch regulatory regime that has served to foster healthy growth. The industry in Europe, and in the UK in particular, has – hitherto at least – been remarkably scandal-free in comparison to the US.
EuroHedge, counting all of the firms based in Europe – including all the smaller players in the sub-billion dollar bracket, too – total assets managed by all the hedge fund firms headquartered in the UK now come to about $360 billion. This does represent a dominant position in the European time zone – about 78% of the assets of European hedge funds, with the second biggest centre, Paris, gaining market share but still a long way behind at about 6%.
The method used to compile our statistics might, however, significantly understate the importance of London. As our survey confirmed, a large number of US-based firms – more than 100 – also now have European offices, and mostly in London. And the money they manage from London is not counted in the EuroHedge statistics unless they run dedicated European funds. In practice, only a minority of these big US firms do operate European funds – and so assets run from London by the others are not captured in the statistics. And if, for the sake of argument, an average of, say, 20% to 25% of their assets are now being run from London, then a case might be made that London is indeed getting close to New York as the top hedge fund centre.
London does enjoy some obvious advantages. Its position in the global time zones, with trading hours that overlap Asia in the morning and the US in the afternoon, make it ideal for dealing in global asset classes such as currencies, government bonds and commodities. Its heritage as a major banking and financial centre also creates a fertile breeding ground for trading talent in these asset classes required to manage hedge funds. And the UK has benefited from a generally benign, light-touch regulatory regime that has served to foster healthy growth. The industry in Europe, and in the UK in particular, has – hitherto at least – been remarkably scandal-free in comparison to the US.