Ray Dalio’s Bridgewater Associates Inc. overtook JPMorgan Chase & Co. to become the biggest U.S. hedge-fund manager, even as the firm lost assets during the industry’s worst year, according to a survey.
Bridgewater, based in Westport, Connecticut, managed $38.6 billion on Jan. 1, down 11 percent from July, according to Absolute Return magazine. New York-based JPMorgan, which owns Highbridge Capital Management LLC, ranked second at $32.9 billion, a decline of 26 percent.
“The bulk of hedge funds were delivering returns that were highly correlated with the market,” said Sharath Sury, chief executive officer of S4 Capital LLC, a Chicago-based firm that advises clients on investing. “So when the markets fell, so did their assets.”
Investment returns dropped an average of 19 percent last year, the most on record, according to data compiled by Chicago- based Hedge Fund Research Inc. Hedge-fund assets shrank to $1.2 trillion at the end of 2008 from the June peak of $1.9 trillion on the market losses and investor withdrawals, according to Morgan Stanley analyst Huw van Steenis in London.
Assets at U.S. hedge funds that managed at least $1 billion each fell 32.3 percent in the second half to $1.1 trillion, according to Absolute Return, which is published by London-based HedgeFund Intelligence Ltd.
Paulson & Co., run by John Paulson, rose to third place from fourth. The New York-based firm’s assets declined 16 percent to $29 billion, according to the magazine.
Bridgewater’s Pure Alpha fund returned 8.68 percent last year, Absolute Return said on its Web site. Highbridge saw assets drop 32 percent in 2008 from the previous year, the bank said during a Feb. 26 investor presentation. Its multistrategy fund lost 27 percent of its value. The bank said its returns improved in early 2009.
The number of hedge fund firms managing more than $1 billion declined 19 percent to 218, according to the magazine.
Baupost Group LLC, a Boston-based hedge fund run by Seth Klarman, gained the most assets in 2008, with money under management rising 49 percent to $16.8 billion, according to the magazine. Farallon Capital Management LLC, a San Francisco-based firm, lost 44.4 percent of its assets last year, the most among all hedge funds, leaving the company with $20 billion, Absolute Return said.
New York state is home to the largest hedge-fund firms, where 121 firms managing a combined $680 billion are based, according to Alpha magazine. Connecticut ranked second with 29 firms overseeing $149 billion in assets, while California was third with 25 hedge-fund companies managing $96 billion.
Source: Absolute Return magazine via Bloomberg
*As of Dec. 31. All other figures as of Jan. 1