New York City and London compete with other for the title of financial capital of the world.
When it comes to the hedge fund industry however, there is no contest.
The hedge fund industry in New York City dwarfs the industry in London. It has a combined $US1.02 trillion in assets under management compared to London’s $US395 billion, according to a new report from Preqin.
Here’s how New York’s hedge fund industry compares to other cities around the world, via Preqin:
Hedge fund managers in New York also charge more than managers in other cities.
The mean management fee in New York is 1.59%, compared to the 1.56% mean fee charged by other managers around the world. The mean performance fee in New York is 19.65%, above the 19.16% mean performance fee for the rest of the world.
The mean management fee in London is also higher than elsewhere — at 1.6%. But the mean performance fee is only 18.55%.
How do the New York City funds get away with charging more than funds elsewhere in the world?
It might have something to do with the fact that they have deliver superior returns on a three-year and five-year basis.
On a three-year basis, they returned a net 9.55%, versus the 9.24% average returns from all hedge funds. On a five-year basis they have returned 9.07%, versus 8.37% from all hedge funds.
Take a look:
Here is the breakdown for London funds. New York funds beat them on a year-to-date, three-year, and five-year basis: