Spooked investors slowed their hedge fund investments in March and turned in greater numbers to funds of hedge funds.

The industry saw inflows of $16.3 billion in March, according to BarclayHedge and TrimTabs Investment Research, down slightly from February’s $17.5 billion inflow—itself down $4 billion from earlier estimates of hedge fund inflows. All told, hedge funds added $41.2 billion in the first quarter, down 42% from the first quarter of 2007.

Investors added $4.2 billion to single-manager funds in March, just a quarter of the total industry inflows. In February, single-manager funds accounted for almost 40% of the month’s inflow.

What’s more, things are unlikely to have improved last month, despite improved returns for the industry, according to Sol Waksman, BarclayHedge CEO.

“Inflows into hedge funds probably remained weak in April,” he said. “Extreme market volatility and March’s poor hedge fund performance will probably deter investors from putting lots of money to work in hedge funds.”