Hedge Funds Pull in USD 73 Billion in First Half of 2011

Yes, someone is always making money – even if the markets are dropping like dead pigs from the sky. Hedge Funds Pull in $3.8 Billion in June, the sixth straight month of inflow, and increased the value of their portfoilios by $ 73,0 billion in first half of 2011. The hedgde funds bearish multi-strategy is certainly paying off these days.

“But we wonder if strong inflows will persist through the remainder of the year in light of the recent bloodbath in equities.”

Sol Waksman

In addition, fixed income hedge funds reports of 13 months of inflow in the past 14,  and turn in the second-best performance of all hedge fund strategies in the first half of this year. Macro funds also posts solid inflows. but are still underperforming, according to the latest reasearch by BarclayHedge and TrimTabs.

The hedge fund industry took in $3.8 billion (0.2% of assets) in June, the sixth straight inflow as well as the eleventh in 12 months, report BarclayHedge and TrimTabs Investment Research.

Industry assets decreased to $1.806 trillion from $1.822 trillion in May because performance was poor.

The Barclay Hedge Fund Index decreased 1.0% in June.

“Investors were very kind to hedge funds in the first half of the year,” says Sol Waksman, founder and President of BarclayHedge.

Adding: “The industry raked in $73.0 billion (4.0% of assets), which goes down as the heaviest first-half inflow since 2007.  But we wonder if strong inflows will persist through the remainder of the year in light of the recent bloodbath in equities.”

Fixed Income hedge funds hauled in $15.1 billion (7.9% of assets) in the first half of 2011, the second-heaviest inflow of all hedge fund strategies.  These funds took in money in 13 of the past 14 months and returned 4.9% in the first half of the year, the second-best performance of all strategies.

“Fixed Income funds are on fire,” notes Minyi Chen, Vice President of Quantitative Research at TrimTabs.

“Keep in mind that hedge fund managers, alongside most other segments of the market population, have been bearish on the long end of the curve all year.  Nevertheless, the yield on the 10-year Treasury has plunged to 2.36% from 3.75% in February,” Chen point out.

Multi-Strategy hedge funds raked in $15.2 billion (7.2% of assets) in the first half of 2011, the heaviest inflow of all hedge fund strategies, even though they posted a mediocre return.

Similarly, Macro funds and Emerging Markets funds posted two of the heaviest inflows despite turning in the two worst performances of all hedge fund strategies.

“We see lopsidedness between performance and flows regularly in not only our hedge fund flow data but also our retail and institutional flow data,” Chen notes.

“These imbalances are predictive more often than not.  We believe investors should consider investment candidates that are performing well but not attracting heavy inflows.  Similarly, we fear any asset class into which investors keep flocking despite poor returns,” he says in a press release.

Advertisements

2 Comments

Filed under International Econnomic Politics

2 responses to “Hedge Funds Pull in USD 73 Billion in First Half of 2011

  1. hotshot

    Wow! That’s an remarkable slant.

  2. Pingback: Chaos in Financial Markets are “Potentially Dangerous for Humanity” | EconoTwist's