LAKEVILLE, Conn. (HedgeWorld.com)–The number of investment advisers that provide investment services to hedge funds or other pooled investment vehicles are on the rise, according to a recent study from the Investment Counsel Association of America and National Regulatory Services.

The number of Securities and Exchange Commission-registered investment advisers working with hedge funds rose to 1,762 in 2003 from 1,619 in 2002, according to the survey, “Evolution/Revolution: A Profile of the U.S. Investment Advisory Profession.”

At the National Regulatory Services, it’s the biggest jump officials have seen of the number of registered hedge fund advisers in Investment Adviser Registration Depository during the three-year history of the survey, said Robert Stirling, senior consultant at the NRS, which provides services to both hedge funds and investors in analyzing SEC compliance.

The percentage of registered investment advisers providing advice to pooled vehicles grew steadily in recent years, from 20.7% in 2001 to 21.3% in 2002, to 22.4% in 2003, according to the survey. Overall, the number of entities that had filed Form ADV, Part 1 was 7,852, which is an increase from the 7,581 entities that had filed the year before.

While the number of registered funds is on the rise, the amount of assets accumulated in registered hedge funds has yet to grow, according to data gathered by HedgeWorld earlier this year Previous HedgeWorld Story.

But the possible reasons for the increase in hedge funds registering are many. Mr. Stirling pointed to three main trends: hedge funds registering to attract institutional investors; registering to beat the SEC to the punch; and registering because hedge funds are large enough to exceed the 15 clients or less exemption rule.

Looking at the structures of those registering with the SEC, researchers found that 35% of advisers reported that they or related persons are general partners in an investment-related partnership or manager of an investment related Limited Liability Corporation (LLC). According to the report’s authors, this 1% increase from the year before may suggest that congressional and regulatory scrutiny of hedge funds has not deterred from the continuing growth in investment partnerships in recent years.

Meanwhile at NRS, Mr. Stirling has seen a growing number of non-registered hedge funds wanting SEC compliance reviews, while investors ask for the firm to review the hedge funds compliance methods as part of the due diligence process.

SBarreto@HedgeWorld.com