Analysis Shows Hedge Fund Industry is Booming

SigTech reports that after continued expansion in 2021, there are currently 27,255 active hedge funds globally

An in-depth analysis1 compiled by quant technologies provider SigTech, reports that after continued expansion in 2021, there are currently 27,255 active hedge funds globally. 

Geographical breakdown

Top 10 Hedge Fund Domiciles

The hedge fund industry remains dominated by the US market, which is home to 67% of all hedge funds globally, followed by 9% in the UK, 4% in China, and ca. 2% each in Brazil, Canada and Switzerland. 

When it comes to the cities that have the largest concentration of hedge funds, unsurprisingly New York is the clear leader with nearly 7,000 funds (25.0% of total), followed by London with over 2,000 (8.2%), and Hong Kong with nearly 1,000 (3.6%).

Top 10 cities                           No. of hedge funds                 % of total hedge funds

New York                                           6,801                                       25.0%

London                                              2,230                                       8.2%

Hong Kong                                         978                                          3.6%

Boston                                                931                                          3.4%

Chicago                                              786                                          2.9%

Greenwich (USA)                               682                                          2.5%

San Francisco                                      677                                          2.5%

Los Angeles                                        482                                          1.8%

São Paulo                                            448                                          1.6%

Toronto                                               395                                          1.4%

Daniel Leveau, VP Investor Solutions at SigTech, comments: “Our analysis reveals a strong and vibrant global hedge fund industry. Despite a healthy growth in emerging hedge fund centers,  US-based managers continued to dominate the industry, both in absolute numbers and in terms of new fund launches. 

Strategy breakdown

The most popular hedge fund strategy is Equity Long/Short, followed by Multi Strategy, Equities others (e.g., long bias, short bias), Fixed Income Credit and Event Driven.  The fast-growing sub-strategy Crypto now makes up ca. 3% of all hedge funds. Also noteworthy is that 22% of the world’s hedge funds apply a purely quantitative investment process and ca. 2% claim to use artificial intelligence.

Top 10 hedge fund strategies              No. of hedge funds     % of total hedge fund strategies

Equity Long/Short                                          6,925                                       26.0%

Multi Strategy                                                 4,899                                       18.4%

Equities others                                                3,120                                       11.7%

Fixed Income Credit                                       3,004                                       11.3%

Event Driven                                                   2,004                                       7.5%

Managed Futures                                            1,780                                       6.7%

Macro                                                              1,450                                       5.4%

Relative Value                                                1,377                                       5.2%

Alternative Risk Premia                                  997                                          3.7%

Crypto                                                             774                                          2.9%

New hedge fund launches

On the backdrop of a strong performing hedge fund sector, new fund launches remain strong, with nearly 2,000 new launches per year on average since 2019. Of the 5,500 new hedge funds launched since 2019, 70.2% are based in the US, 9.3% in the UK and 5.2% in China.

Top 5 countries for hedge fund
launches since 2019                            No. of hedge fund launches                % of total

USA                                                                3,859                                       70.2%

UK                                                                  512                                           9.3%   

China                                                               287                                          5.2%

Brazil                                                               127                                          2.3%

Canada                                                            101                                          1.8%

The most popular strategy for these new funds is Equity Long/Short, followed by Fixed Income Credit, Equity others (e.g. long bias, short bias) and Multi Strategy.

Top 10 hedge fund strategies              No. of hedge funds                 % of total

among fund launches

Equity Long/Short                                          1,059                           19.3%

Fixed Income Credit                                       515                              9.4%

Equity others                                                   394                              7.2%

Multi Strategy                                                 348                              6.3%

Crypto                                                             310                              5.6%

Event Driven                                                   244                              4.4%

Relative Value                                                241                              4.4%

Macro                                                             238                              4.3%

Managed Futures                                           133                              2.4%

Alternative Risk Premia                                  38                                0.7%

Leveau adds: “The robust level of new hedge fund launches reflects a sustained strong demand from investors for innovative and uncorrelated investment strategies to meet return expectations in an increasingly challenging market environment. Hedge fund growth shows no signs of abating, fueled by the ever-increasing investment opportunities in the market, and the growth of new data and tools available to these funds.” 

Crypto hedge funds on the rise

In 2021, a record number of 171 crypto hedge funds were launched. In total, there are now 774 hedge funds focused on crypto, with the US again being the driver of innovation with 80% of these funds domiciled in the US. 

Daniel Leveau says, “We are investing heavily in our quant technology platform to satisfy the strong demand from hedge funds looking to accelerate their data-driven investment processes.

Alongside the growing hedge-fund community, SigTech enjoyed strong growth in 2021. Clients with a combined AUM of over $5 trillion are now using our platform, including some of the world’s leading hedge funds, as well as recently launched start-up systematic funds.”

1 Study based on market intelligence from SigTech’s hedge fund clients and data from Preqin (as of February 2022)