Investors are still shying away from emerging markets hedge funds, as last year’s top-performing strategy continues to suffer from poor returns.

Global emerging markets funds added $995 million in the second quarter, according to Hedge Fund Research. While that is a more than 60% increase compared to the first quarter inflow of $597 million, it is down 72% from the second quarter last year. And if inflows continue at this rate, 2008 could post the lowest inflow since 2000.

The number of emerging markets hedge funds grew by only a handful, standing at 1,061 from 1,057 three months earlier.

“While overall flows have slowed, investors continued to allocate assets to emerging markets hedge funds in the second quarter, indicating a continued belief in the long-term growth prospects for these developing economies,” Kenneth Heinz, president of HFR, said.

Among the trends uncovered by HFR is a growth in emerging markets macro strategies, as funds abandon poor-performing equity hedge strategies.