Goldman Sachs's growth in asset management is just stellar.

In a sign that hedge fund investing is becoming more and more of a game for the big guys, Goldman Sachs Asset Management, with $21 billion in hedge fund assets, tops the list of the world's 100 biggest hedge fund firms according to Alpha Magazine's annual ranking released this morning. Alpha is part of Institutional Investor, and its Hedge Fund 100 list, compiled since 2002, has become a benchmark tool for investors trying to identify who the top hedge fund players are in dollar terms.

Last year's top-ranked firm, San Francisco-based Farallon Capital Management, fell to number four, despite a $4 billion rise in assets. Goldman has seen its asset size increase by 85% each of the past two years. In 2004, the firm was ranked number 24 on the list with $5.4 billion in assets, and last year it had grown to $11.2 billion. The 2006 rankings reflect asset sizes as of Dec. 31.

"Goldman Sachs has the market penetration, the depth, the talent and the brains," says Steve Drobny, founder of Drobny Global Advisors, a hedge fund advisory firm, and author of In The House of Money, a recent book on macro investing. "They've been successful in the real-asset management space and have been able to convert that into the hedge fund space. They have caught on to the hedge fund opportunity."