The Fund of Funds 50: Survival of the Biggest

Funds of hedge funds are finding that bigger is indeed better, as the largest firms have the tools necessary to adapt and survive.  When it comes to funds of hedge funds, one name is practically synonymous with the industry — Blackstone Group. That's in part because of its colossal size: As of year-end 2012, Blackstone Alternative Asset Management, the fund-of-hedge-funds arm of the $218 billion alternative investment firm, had $44 billion in assets. That is almost $20 billion more than each of its two closest competitors, making BAAM the single largest allocator to hedge funds in the world.

But it's also because Blackstone has managed to pull off something rare in the rapidly shrinking fund-of-hedge-funds business: It not only survived the 2008 financial crisis, it has thrived. For the second year running, BAAM is No. 1 on our Fund of Funds 50 list of the world's largest fund-of-hedge-funds firms as ranked by assets under management (the top 50 firms manage a combined $493.5 billion, down from $503 billion one year...

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