The hedge fund industry grew to a record size last year after investors added billions of dollars more to managers' coffers and rising stock prices swelled assets, new data showed on Tuesday.
Total assets under management rose to $2.63 trillion, up from $2.25 trillion a year ago, according to Chicago-based data provider Hedge Fund Research.
The bulk of the gains came from a rise in the value of investments held by hedge funds, but $63.7 billion - about 15 per cent of the increase and almost double 2012's $34.4 billion - came from net new money invested, HFR said.
Event-driven strategies - which try to make money betting on the outcome of corporate transactions - and funds trading shares accounted for the biggest chunks of the new cash, HFR said.
Assets under management in the hedge fund industry have recovered since the 2008 financial crisis as institutional investors look to diversify away from their traditional stock and bond holdings. This increased demand has continued despite the industry underperforming equity markets since 2009.