Hedge fund investment inflows reach $13.83 billion in Q2, says Tremont

Second quarter net inflows almost doubled from the first quarter's figure of $7 billion, said Tremont.

"I believe the strong flows this year demonstrate the fact that institutions are embracing hedge funds as an asset class,” commented Tremont Capital Management's co-chief executive Robert Schulman.

The research also found that strategies that performed best in the previous 12-month period experienced the biggest second quarter inflows. Convertible arbitrage attracted $2.7 billion of investment, followed by 'global macro' investments with $2.5 billion, and managed futures with $2.3 billion. The latter two categories saw some of the largest inflows in the first quarter of the year. The only category to show a net loss of funds was 'dedicated short bias' investments, where there was an outflow of $64 million.

Tremont’s data indicates that $1.7 billion of net flows to the hedge fund industry were directed at new funds. Another finding of the second quarter was a sharp slowing in funds returned to investors. In the first quarter, Tremont calculated that $2.1 billion in net assets were returned, compared with $1.1 billion in the second quarter. Tremont attributes this to a slowdown in the number of hedge funds closing due to performance issues.

The previous quarterly net asset flow record determined by Tremont occurred in the fourth quarter of 2001, when $8.8 billion in net assets were added.

The Tass Research quarterly analysis of hedge fund flows is based on an analysis of approximately $400 billion in hedge fund assets. The research is based on the performance of more than 5,400 funds.

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