Fourth consecutive record quarterly inflow to hedge funds, says Tass

Investors continued to favour equity-orientated strategies during the first quarter of this year, with hedge funds gaining a record $38.2 billion in net assets, the fourth consecutive quarterly record for industry inflows, according to Tass Research, a unit of Rye-based Tremont Capital Management.

In the fourth quarter of 2003, investors added a net $26.8 billion to the hedge fund industry, a year in which hedge funds captured a total of $72.2 billion, said a Tass report.

The report revealed the most popular strategy, based on net asset inflows, was long/short equity, with an $8.2 billion increase. Second was event-driven with $6.9 billion, with global macro recording an increase of $5.5 billion. It was the third quarter in a row that the three achieved these rankings. They were the most popular for all 2003.

Robert Schulman, co-chief executive of Tremont Capital Management, said the increase was due to people putting money back into equities after the difficult year of 2002, and because of continued institutional investor interest in alternative strategies. “Investors have become increasingly aware of the volatility of the broad markets and have become very interested in seeking out absolute return strategies that are uncorrelated to the broad markets,” he said.

Tass Research based the report on an analysis of approximately $542.4 billion in hedge fund assets from the US and overseas. It currently estimates the global industry’s asset base at $830 billion, with an additional $200 billion-300 billion estimated to be in privately managed accounts.