Hedge funds pulled in $9.5 billion during the second quarter with nervous investors preferring to send their money to the biggest and best established managers, according to industry tracker Hedge Fund Research on Tuesday, Reuters reported.
Hedge fund managers have seen flat returns on average as they have battled a volatile market so far this year, but that hasn’t stopped wealthy investors from sinking more cash into the industry. Strategies to insulate investors from stock market swings, using global macro and event-driven funds, have been seen as particularly attractive.
The fund industry’s most established firms, with more than $5 billion in assets under management, reported $8.8 billion of the total inflows in the second quarter, according to HFRI.
“The hedge fund industry continues to be dominated by investor preference for robust fund infrastructure, encompassing enhanced liquidity and transparency,” Ken Heinz, president of HFRI, said in a statement.
Over all, hedge fund performance declined by about 0.2 percent in the first half of 2010, according to HFRI. While the performance may seem shabby compared to blockbuster 2009 returns, hedge funds have shown that they are getting better at holding onto investor capital.
“Compared to at least the equity markets, they’ve fared pretty well,” said Oliver Schupp, president of alternative investment specialist Credit Suisse Index The benchmark Standard & Poor’s 500 index was off 7.9 percent for the year through June 30, though has bounced back some in the last few weeks.
Global macro, event-driven and fixed-income arbitrage funds have been the best performing funds so far this year and also attracted the most new capital, according to data on Tuesday from Credit Suisse.
Global Macro funds which are up 4.2 percent on average so far this year, have attracted some $9.1 billion in inflows in 2010, boosted mostly by an $8.3 billion surge in the first quarter, according to Credit Suisse.
Fixed income funds and event-driven funds have each attracted about $2 billion of fresh inflows this year, according to Credit Suisse. Through the second quarter, fixed income fund returns are up 5.5 percent on average, while event-driven funds are up 1.8 percent on average, Credit Suisse said.
By contrast, emerging market funds, long-short equity funds and multi-strategy funds saw the biggest outflows in the second quarter, Credit Suisse said. Multi-strategy funds have been the biggest losers of the year, seeing some $8.9 billion in outflows.