Hedge Funds Burned By July Outflows

Sep 3 2010 | 12:36pm ET

Hedge funds continued to hemorrhage assets despite strong performance in July, according to a new report.

Investors yanked $2.9 billion from hedge funds in July, TrimTabs Investment Research and BarclayHedge said. The outflow—the industry’s second-straight monthly setback—of 0.2% of total hedge fund assets left industry assets at their lowest level since November at $1.53 trillion.

“Hedge funds posted a positive return in July, but they did not regain the ground they lost in May and June,” BarclayHedge’s Sol Waksman said.

Things look even grimmer for funds of hedge funds, despite a proportionally smaller outflow, according to TrimTabs’ Vincent Deluard.

“Funds of funds are in a bad way,” he said. “They posted only five inflows in the past 25 months.” One of those months was not July, when investors pulled $670 million from funds of funds, or 0.1% of total assets.

Things were not bad across the board, however. Commodity trading advisors alone took in $3.9 billion in July, the strategy’s fifth-straight inflow.

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