Top hedge funds manage $1.3 trillion

By Ben Rooney, staff reporter

NEW YORK (CNNMoney) -- After taking a hit from the financial crisis, hedge funds are making a strong recovery. They're attracting big money and raking in the profits.

American hedge funds managed a combined $1.297 trillion as of January 1, 2011. That's up $115 billion, or 10%, from a year ago, according to AR: Absolute Return+Alpha, an industry publication.

The survey of funds with at least $1 billion in assets under management, released Wednesday, also showed that performance gains, which reflect investment returns and inflows from new clients, for the bulk of the group were up 9% last year. Most of the gains came in the second half of the year.

The number of billion dollar funds rose to 225 last year from 213 in 2010, despite the closing of some high-profile funds and insider trading investigations last year

Still, the industry has not fully recovered from the recent financial crisis, when market turmoil and tight credit prompted an exodus from hedge funds. Before the crisis struck in 2008, the industry's largest 268 funds managed a total of $1.675 trillion, according to AR.

The report also showed that the industry is consolidating, with the biggest hedge funds growing even bigger. The 10 largest billion dollar funds oversee a combined $309 billion as of January, up 15% from last year.

Bridgewater Associates was ranked as the largest U.S. hedge fund, with a total of $58.9 billion in assets under management. The Westport, Conn.-based fund also had the biggest performance gain of any fund in the survey, with a whopping $15.3 billion increase in assets under management last year.

The second largest fund in the survey was JPMorgan Asset Management, which gained $7.1 billion last year, bringing the total amount of money under management to $45.5 billion. Paulson & Co., the New York-based hedge fund, came in third again at $36 billion in assets under management.

Meanwhile, the worst performing fund in the survey was D.E. Shaw Group, which lost $9.37 billion, or nearly 40%, of its assets in 2010. The firm now manages $14.23 billion, according to AR. To top of page

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