Hedge Fund Assets At Record After $16B Q1 Inflow

Apr 19 2012 | 12:35pm ET

Investors flooded into hedge funds in the first quarter, sending industry assets back above pre-crisis levels.

The industry took in $16 billion in net inflows in the first three months of the year, according to Hedge Fund Research. Along with performance gains, that pushed total hedge fund assets up to $2.13 trillion.

The new total tops both the industry's pre-crisis asset level and the record of $2.04 trillion set at the middle of last year.

Relative value and macro strategies were most popular among investors, taking in $12.4 billion and $7.8 billion, respectively. Larger managers were also favored during the first quarter; those with more than $5 billion in assets saw net inflows of $18.3 billion.

Equity funds and smaller hedge funds did less well. The former suffered net redemptions of $2.9 billion. Hedge funds with less than $5 billion in assets lost $2 billion to redemptions. Event-driven funds were also losers, suffering net withdrawals of $940 million.

"Investors responded favorably to the risk-shifting which occurred across financial markets in the first quarter," HFR President Kenneth Heinz said. "Sophisticated institutional investors are increasingly allocating to hedge funds as a powerful strategic portfolio complement to existing traditional holdings."


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