Because the assets under management have been growing faster than
the number of hedge funds, it is clear that the size of the average hedge
fund is rising. Figure 1.3 shows the average size calculated from the data in
Figure 1.1 and Figure 1.2.
The size of the average hedge fund grew irregularly over the past 15
years. Although the assets grew by an average rate of 8.3 percent annually,
5
the average size remained about the same or declined in about a third of
the years.
Funds of hedge funds have been growing somewhat faster than single-
manager hedge funds. Figure 1.4 shows the assets under management in-
cluding both direct investments and investments through a fund of funds
intermediary. Single-manager funds (funds that implement hedge fund
strategies other than fund of funds strategies) have grown at 21.5 percent
annually.
6
Fund of funds investments in hedge funds have grown at 26.0
percent annually.
7
For this time period, the combined hedge fund assets
have grown at 22.6 percent annually.
8
Introduction
9
FIGURE 1.2
Estimated Hedge Fund Assets under Management ($Billions)
Source: ©2004 by Van Hedge Fund Advisors International, LLC, and/or its li-
censors, Nashville, TN, USA.
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