Hedge Funds Post First Quarterly Inflows Since Last Year

Oct 19 2009 | 1:14pm ET

Hedge funds enjoyed modest net inflows in the third quarter. But after four consecutive quarters of net outflows, even a paltry $1.1 billion in new capital for the industry is cause for breaking out the champagne.

Over two-thirds of hedge funds took in new money during the third quarter, according to Hedge Fund Research. The unlucky third, however, were disproportionately punished by investors. The outflows at the latter totaled more than $37 billion, while the inflows at the former were more than $38 billion. Over the 12 months preceding the second quarter, investors yanked some $330 billion from the industry.

Still, the hedge fund industry was $100 billion larger at the end of last quarter than at the end of the second, thanks to continuing strong performance for hedge funds. The third quarter was the industry’s best in terms of performance in more than a decade, pushing total industry assets to $1.53 trillion.

Funds of hedge funds have continued to lose assets, HFR data shows. Nearly three-quarters of funds of funds suffered outflows in the third quarter, but those losses totaled just $3.2 billion. Over the previous four quarters, investors withdrew $180 billion from funds of funds.

“The most recent data suggests that the sentiment of hedge funds investors has improved from historical lows, but investors remain selective about fund strategy and exposure characteristics,” said Kenneth Heinz, HFR’s president. “Sharp performance dispersion across funds, strategies and timeframes in the last five quarters has contributed to a more tactical allocation environment where both expectations and positioning can vary widely from one investor to the next.”


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note