The entry of hedge funds into radio and TV station financing in the past couple of years has been one of the biggest changes in the station transaction market - and broadcasting is not alone. Many other industries are seeing involvement from hedge funds as the aggressive managers seek new places to put their funds to work. Also, investors are literally lining up to pump more cash into hedge funds in hopes of generating better returns than many other investments. Hedgefund.net estimates total hedge fund asset levels increased by almost 6% in the last quarter of 2006 to 1.89 trillion from 1.79 trillion in the third quarter. The substantial rise in total asset level was the second largest quarterly increase since Q1 2005. For the entire year 2006, total hedge fund assets jumped by almost a quarter to 1.89 trillion from 1.53 trillion in 2005. Here are some of the major trends cited in a new report, "Hedge Fund Asset Flows & Trends Report 2006 - 2007," published by Institutional Investor News and HedgeFund.net:
Total fund of fund assets continue to increase at a steady pace. Fund of fund assets rose 22% in 2006, or 174 billion, to 953 billion. New allocations increased an estimated 125.7 billion while performance increased total assets an additional 48 billion.
Europe continued to be the fastest growing major investment region for most hedge funds. Total assets in funds which invest primarily in European markets increased at a rate of 46% in 2006 to 276.5 billion.
Equity-focused hedge fund assets rose 30% to 743 billion in 2006. New assets accounted for 69% of the 173 billion increase. Equity focused hedge fund assets rose 8.3% in Q4 2006, the second highest increase since Q1 2005.
Despite a mid-year blip in performance, emerging market fund assets increased 41.4% to 174.5 billion in 2006 from 123.4 billion in 2005. New allocations for all of 2006 were 22.9 billion.
Emerging market equity focused fund assets increased 58% in 2006 while emerging market debt focused fund assets increased 23.3%.
Total assets in energy sector focused hedge funds increased 52%, or 27 billion, to 79.3 billion in 2006 including new allocations of 18.2 billion.
