HFR: Hedge Fund Industry Now At $1.57 Trillion

Apr 20 2007 | 1:09pm ET

The hedge fund industry saw record inflows of more than $60 billion during the first quarter of 2007, bringing total assets under management to $1.568 trillion, according to data released this week by Hedge Fund Research. These new inflows were equal to nearly half the record $126 billion in new assets gathered by hedge funds in all of last year.

Equity hedge and relative value arbitrage strategies proved most popular among investors, together having accounted for more than half of all inflows. Every major strategy tracked by HFR recorded a positive flow for the quarter, and funds of funds saw net new flows of $8 billion in the first quarter, marking the fifth straight quarter of positive inflows for that category.

“After a relatively quiet end to what was still a record-breaking year in 2006, investors have begun pouring money into hedge funds at a pace we have never seen before,” stated Ken Heinz, president of HFR. “The trend in asset flow suggests that both individual and institutional investors are actively allocating to hedge funds, while the performance indicates hedge funds are exceeding these investors’ expectations.”

The HFRI Fund Weighted Composite Index returned 2.81% in the first quarter, with emerging markets leading the pack up 5.06% followed by merger arbitrage (+4.83%), as the top performing strategies. The S&P 500 returned 0.64%, while the MSCI World returned 2.06% during the same period.


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