Is New York Really the Hedge Fund Capital of the U.S.?

New York, hedge funds: In almost every financial circle, New York City is widely regarded as the hedge fund capital of the U.S. With pop culture references galore (we’re looking at you Wall Street, and more recently, Richard Gere’s Arbitrage), a middle class income range between $80,000 and $235,000 (in Manhattan), and the presence of nearly every major investment banking business, it’s hard to think otherwise.

So is New York really the hedge fund capital of the U.S.?

The data points to a resounding yes. According to a report earlier this year by FinAlternatives, it is found that “between 2009 and 2010, Manhattan accounted for…92% of hedge fund launches among new firms choosing between it, Greenwich, Conn., and Stamford, Conn.” Despite the availability of 21st century technology in the hands of every hedge fund manager and–more importantly–every potential investor, face-to-face contact is still king. According to that same article, it’s said that Bank of America’s prime brokerage unit “tells its hedge funds that being elsewhere could cost it between 10% and 20% of potential investor meetings.”

The Wall Street Journal also covered this phenomenon, pointing out that Chris Hentemann, who originally wanted to establish his hedge fund in Stamford, decided to move to Midtown Manhattan because, “There were enough roadblocks to establishing a new fund that [he] didn’t want to create another.” Hentemann also adds, “I can capture that investor that may not have made that trip up to Greenwich, but they had an opening in their schedule an hour before they had to go to JFK to go back to Europe.”

This brings up an important point about why New York City and specifically Manhattan is preferred by hedge funds: it’s an international transportation hub. NYC & Company determined back in 2011 that 50 million tourists visited the city, making it “the number one city destination and overseas destination for tourist spending in the United States,” according to official estimates.

Cities like Chicago and San Francisco get their fair share of tourists as well, but it’s clear that the ease of travel opportunities present in NYC in addition to the hub of banking activity makes it a perfect mecca.

Even Crispin Odey, who’s noted for focusing his business in London, recently told MoneyBeat that his fund is “mad we’ve never had an office there before,” adding that the $10 billion operation is opening a small office in the city.

We’ll see how small it stays in the next few years.