Hedge Fund Management Industry Overview

Excerpt from Hedge Fund Management Report

The US hedge fund industry includes thousands of companies with combined assets of more than $1 trillion. Many large funds headquartered in the US operate internationally. The largest US-based hedge funds include Bridgewater Associates, BlackRock, JPMorgan Asset Management, Och-Ziff Capital Management, and Paulson & Co.

Competitive Landscape

Demand for hedge fund services is driven by the growth of investment capital managed by institutional investors. The profitability of individual funds depends on investment expertise. Large funds can more easily participate in big financial transactions. Small funds can compete effectively through specialized investment strategies. The industry is capital-intensive.

Products, Operations & Technology

Hedge funds operate much like mutual funds, but are also able to trade financial derivatives and to take "short" positions, in which investors sell borrowed shares of stock in anticipation of a decline in value, and buy them back at a profit. In contrast, mutual funds can own only registered securities such as stocks and bonds. Hedge funds typically specialize in a particular type of investing, such as stocks, bonds, commodities, futures contracts, distressed securities, mergers and acquisitions, arbitrage, or investing in other funds.