Investors poured $43.3 billion into hedge funds in Q2 2012 for net inflows of $4.1 billion, according to the latest figures from Hedge Fund Research.
The second quarter totals bring net first half inflows to over $20 billion.
That said, hedge fund capital declined 1.3% from a record $2.13 trillion in Q1 to $2.10 trillion in Q2 as the HFRI Fund Weighted Composite Index for the second quarter declined 2.7%.
As in previous quarters, large funds continued to be the biggest benefactors of increased inflows, with over $11 billion going to firms with over $5 billion AUM in Q2. Firms with less than $5 billion AUM experienced net redemptions of about $6.9 billion.
HFR says about 30% of all funds experienced net inflows in the second quarter of 2012 while 70% experienced net outflows.
Investors continued to favor fixed income-based relative value arbitrage strategies in the second quarter, allocating nearly $10 billion to these funds, particularly to multi-strategy funds. Relative value strategies added 4.2% in the first half, leading all hedge fund strategies, according to HFR.
HFR President Kenneth J. Heinz said in a statement that fund performance and capital flows in H1 2012 reflect “the fluid and volatile environment driven by the continuing European sovereign debt crisis and the recent softening of U.S. economic data. Hedge fund gains in H1 2012 also represent an important bifurcation of investor views regarding near term economic growth prospects, with equity market gains suggesting an improved outlook while historically low fixed income yields suggest an elevated risk of muted growth.”