Hedge funds world-wide had $2.65 trillion in assets under management at the beginning of 2008, up 27% from a year earlier, according to new research compiled by publisher HedgeFund Intelligence.

The survey showed a marked slowdown in the industry's rate of growth, to 6.6%, during the second half of last year as the credit crunch enveloped global markets.

HedgeFund Intelligence editorial director Neil Wilson said: "The continued growth of global assets during the second half of last year - albeit at a slower pace than before - shows that hedge funds generally did a pretty good job negotiating the first phase of the global credit crunch."

With hedge funds on average returning about 8% to investors, the study noted that more than two-thirds of the increase in assets came from new money from investors. A large proportion of the new money is from institutional investors - much via funds of funds.

Globally, 391 hedge funds had assets of at least $1 billion, representing about 80% of the total assets in the industry. Of those funds, 255 are based in the U.S., with 144 in New York, up 17%. New York-based funds had $973 billion in assets at year-end, up 50% from a year earlier.

The total assets of European hedge funds rose 25% to nearly $575 billion and London continues to be the dominant center in Europe, having nearly 60% of hedge-fund assets there. The market share of the top 22 European firms grew to 44% from 37%.

Assets in funds based in the Asia-Pacific region grew 30% to $196 billion at the start of 2008. The study noted huge growth in China and India while Japanese funds had significant net outflows. Tokyo is declining as a hedge-fund center while Hong Kong and Singapore now have a total of 19 firms that manage assets of $1 billion or more.

Source: WSJ