UK's largest hedge funds manage 82% of assets

Financial Conduct Authority tells hedge fund giants to show integrity

Hedge funds manage $470 billion (£285 billion) in the UK, with 82 per cent of the assets controlled by just 20 large firms, the City regulator revealed today.

London is home to some of the world’s best-known hedge funds, including Lansdowne Partners, Odey Asset Management, Winton Capital Management and The Children’s Investment Fund, which emerged as the largest investor in Royal Mail after its stock market flotation last year.

According to the Financial Conduct Authority, the sector is now the third most popular type of alternative investment after real estate and private equity.

The UK’s share of the global market has increased steadily over the past decade with institutional shareholders now the most dominant stakeholders.

With this in mind, Clive Adamson, director of supervision at the FCA, said the regulator would keep tabs on an industry that was partly blamed for the turmoil that followed the 2008 collapse of Lehman Brothers.

“This illustrates how important this $2.6 trillion industry is to the UK. With nearly 20 per cent of all global assets under management here, it is important that people have trust in how we regulate this market,” he said.

“As we move forward as the FCA, the challenge from us to the industry is to ensure that it operates to the highest standards of integrity so that London can maintain its position  in this important global market.”

The news was not all good for the UK: a survey of 49 out of Britain’s 450 hedge funds found that a majority are domiciled overseas. The Cayman Islands was the most popular destination followed by Ireland, the United States and the British Virgin Islands.

According to the FCA, hedge fund managers have also increased their leverage. The amount of debt being held by firms regulated in the UK now stands at about 64 times assets.

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