How Big Is the Hedge Fund Industry?
A variety of commercial services report on hedge funds, but they are given information voluntarily, and no authoritative estimates exist either of the number of such funds or the value of their capital. Double counting can be a problem, too, since some commercial services combine data for funds of funds–hedge funds that invest in other hedge funds–with other categories. Above all, which investors to include is a puzzle. Should individuals or family groups be counted? What about limited partnerships or limited liability companies that invest primarily in assets other than public securities and financial derivatives, or that do not use leverage or short selling? Should one include managed futures funds, which limit their activities to futures markets? Different services answer these questions differently, which largely accounts for their widely varying estimates of the number of hedge funds and the value of their capital. Still, it is useful to see how far the available data allow us t
