LONDON, April 18: London's share of global hedge fund assets increased from 10 per cent to 21 per cent between 2002 and 2006 making London one of the fastest growing hedge fund centres, according to the 2007 edition of International Financial Services Limited (IFSL) Hedge Funds report.

Assets managed by hedge fund managers based in London totalled around $360 billion in 2006, up 40 per cent on the previous year, and a six-fold increase from 2002.

New York remained the leading global location for hedge fund managers in 2006 with 36 per cent of global assets. Its share was down however, from 45 per cent in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the US.

This was largely a result of a rise in institutional portfolio allocation into hedge funds in these regions during this period.

London is by far the largest centre for European hedge fund managers. The 900 hedge funds located in London accounted for four-fifths of European based hedge fund assets in 2006. If figures for fund or funds and US hedge funds with a trading desk in Europe are taken into account, London's share was more than 90 per cent. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.

Factors underpinning London's strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favourable regulatory environment.

London is also a leading centre for hedge fund services notably prime brokerage services offered by the leading London-based investment banks. More than 90 per cent of European prime brokerage activity is conducted through London.

The main purpose of the research and statistics function at London-based IFSL is to raise awareness of the UK's role in international financial markets and to highlight the contribution of financial services to the UK economy.