Market difficulties aside, hedge funds continue to attract big bucks. The industry enjoyed a $41.1 billion inflow in the third quarter, research firm Lipper said. The inflow is the third-largest quarterly take since at least 1994, when Lipper began tracking the data.

Event-driven hedge funds were the biggest beneficiaries of the cash infusion, taking in $15.5 billion. Long/short equity and multi-strategy funds also enjoyed inflows. Fixed-income arbitrage suffered the biggest outflow, at $5.1 billion.

“Growth came from ongoing institutional allocation in a period of heightened volatility across many asset class,” Lipper explained in its report.

Hedge funds have added $101.1 billion in assets in the first three quarters of 2007, a 9% year-on-year increase. In total, hedge funds manage an estimated $1.73 trillion.