May 16, 2011
J.P. Morgan Asset Management, bolstered by Highbridge Capital and its Gávea Investimentos stake, ranked #2 in Institutional Investor's Annual Hedge Fund 100 roundup.
Hedge-fund assets at J.P. Morgan, which was ranked No. 2 by assets, increased $9.1 billion last year to $54.2 billion. The bulk of the growth came from Highbridge Capital Management, the New York–based hedge fund firm co-founded by Glenn Dubin and Henry Swieca in 1992, which J.P. Morgan purchased majority control of in 2004 (the bank has since bought the remaining stake). Highbridge had $6.6 billion in assets and was mostly known for convertible arbitrage at the time of J.P. Morgan's original investment. Today it boasts $26 billion in assets under management and an array of investment strategies.
"Without the J.P. Morgan partnership, we would not have been able to broaden our business the way we have, across so many different strategies, liquidity profiles and geographies," says Mr. Dubin, chief executive of Highbridge.
Highbridge, meanwhile, continues to build out its hedge-fund franchise. Recognizing both the need to offer investors a diversified menu of funds and the rising importance of emerging markets, the firm acquired a stake in Rio de Janeiro–based macro manager Gávea Investimentos in October. In 2003 former Brazilian central banker Arminio Fraga co-founded Gávea, which had $5.6 billion in hedge fund assets when this year began.
According to Institutional Investor, the overall growth in hedge-fund assets reflects institutional investors' desire to diversify out of traditional stocks and bonds and invest in alternative assets that can deliver consistent, non-correlated investment returns. But they want to invest with a manager they can feel comfortable with. As direct hedge fund investments become a more significant part of their portfolios, pension funds, foundations, endowments and sovereign wealth funds have started to target hedge-fund firms they perceive to be "institutional quality" organizations.