The results of the Q4 2008 HFN Hedge Fund Administrator Survey were 60 firms reporting $2.237 trillion in single manager hedge fund assets under administration ($AuA) for 12,075 hedge funds. HFN requested administrators report the most recently available figures through the end of Q4 2008. Additionally, HFN requested administrators not to include feeder funds and to report fund of funds assets, managed accounts and any other alternatives separately so that the single manager hedge fund figure was as pure a representation of the current state of the industry as possible. See "A Look Inside the Numbers" for a discussion on how HFN uses reported administrator assets to estimate the size of the single manager hedge fund industry.

The survey results confirm the hedge fund industry is in the midst of a major contraction primarily brought about by the reaction of global markets to a financial crisis beyond the expectation of most industry participants. The Q4 HFN Administrator Survey provides perhaps the most accurate representation of how severe the damage on the industry has been. In HFN’s prior survey at the end of Q1 2008, administrators reported hedge fund assets of $2.759 trillion meaning third party administered single manager hedge fund assets fell by $525 billion in nine months; however peak to trough was worse as HFN estimated that hedge fund assets peaked at the end of Q2.

Along with the reporting administrators, HFN estimated information from additional sources for a total of 70 administrators and with very few exceptions, $AuA was on a severe decline. Except for #1, the top of the ranking tables changed significantly not only by reported assets, but by composition as well. The exception to this rule was Citco Fund Services which once again was the largest administrator of single manager fund hedge funds with $375 billion in 1,500 funds. The worlds largest hedge fund administrator was not immune to a drop in $AuA however as assets fell 24% from June, along with a reduction of 42 funds from its client base.

The remainder of the top ten saw some noteworthy shifts. State Street Alternative Investment Solutions rose from 5^th to 2^nd with $242 billion in 558 funds; a 21% drop in reported $AuA. Goldman Sachs Administration Services rounded out the top three, rising from 4^th to 3^rd. Not far behind were Citi, The Bank of New York Mellon and HSBC Securities Services. Of these very largest administrators reporting figures through the end of December, the average drop in single manager assets under administration ($AuA) in the last six months was 26%.

Asset declines were the rule, not the exception during the second half of the year. Of administrators reporting prior asset figures, 9 out of 10 reported a reduction in $AuA. The largest drop came from U.S. Bancorp Fund Services which saw assets fall 56% in six months. The firm did not report a reduction in client base, however, meaning that fund losses and investor redemptions accounted for the entire decline. This highlights another metric for viewing the health of the administrators business in this environment which is to look more closely at which administrators have been able to increase client base amid industry wide asset reductions. We discuss this measure more closely in the Fastest Growing Administrators section.