JP Morgan edges out Goldman as biggest hedge fund

By Svea Herbst-Bayliss

BOSTON, May 23 (Reuters) - JP Morgan Asset Management (JPM.N) is the now the world's biggest hedge fund, according to a survey released on Wednesday.

Boasting $33 billion in hedge fund assets, JP Morgan rose 23 spots to beat last year's winner, Goldman Sachs (GS.N) to No. 1 in Alpha magazine's annual listing of the industry's biggest hedge fund portfolios.

Three years ago, JP Morgan took a stake in Highbridge Capital Management, adding enough assets to significantly shake up the rankings this year in the fast-growing, lightly regulated hedge fund industry.

Together the world's hedge funds invest roughly $1.5 trillion in assets, more than double what they had in 2004.

Goldman Sachs, which moved into the No. 1 spot in 2006 with $21 billion in assets, slipped in 2007 after its secretive Global Alpha fund fell on hard times last year. Alpha said it now has $32.5 billion in assets.

The new rankings show how hedge funds have bulked up over the last year as pension funds, endowments, charities and other investors want a piece of these funds that often promise to make money in all markets by using techniques that are off limits at mutual funds.

New York-based Goldman, one of the industry's most preferred prime brokers helping finance and clear trades for hedge funds and often helping managers find investors, lost the head of its alternative strategies unit when Lehman Brothers said it hired George Walker in April 2006.

In another shake-up, Renaissance Technologies Corp., run by former mathematics professor James Simons who hires only scientists to develop the firm's computer-run strategies, vaulted into No. 6 from No. 26 in 2006.

Alpha said the fund has $26 billion under management, but more recent figures put assets closer to $30 billion.

Renaissance's $6 billion Medallion Fund generated annualized returns of over 33 percent over 15 years to 2004, according to marketing material obtained by Reuters.

Westport, Connecticut-based Bridgewater Associates, with $30.2 billion in assets, slipped to the No. 3 spot from No. 2, while New York-based D.E. Shaw Group, which has $27.3 billion in assets, moved to No. 4 from its No. 3 spot last year.