TrimTabs Investment Research and BarclayHedge reported that all hedge funds posted an estimated outflow of $3.8 billion in December 2009. December’s outflow is the industry’s first since July 2009. At the same time, hedge fund assets grew to a 12-month high of $1.5 trillion thanks to an unprecedented 10-month winning streak.

“December’s relatively small outflow is almost certainly seasonal, a product of quarter-end and year-end redemptions,” said Sol Waksman, CEO of BarclayHedge. “Hedge funds experienced outflows in December in each of the past five years, and we suspect inflows have already resumed.”

In addition, funds of hedge funds posted an estimated outflow of $6.3 billion in December, bringing redemptions for all of 2009 to $180.9 billion. Funds of funds returned only 13.4% in 2009, half of the industry’s average 26.8% gain.

“Funds of hedge funds turned extremely risk-averse after the late 2008 sell-off” said Vincent Deluard, Global Equity Strategist at TrimTabs. “Their conservative strategy allocation and large cash balances hurt their returns during this rebound”.

At the strategy level, emerging markets and convertible arbitrage funds showed the highest returns this past year, delivering gains of 64.5% and 53.5%, respectively. Inflows were strongest for commodity-traded advisers and equity market-neutral funds, the two strategies which performed best during the late 2008 sell-off.

Deluard also said, “Funds with the highest fees experienced the smallest redemptions this past year.” He explained, “Hedge fund investors are still willing to pay for good managers: the funds with the highest fees also delivered the best returns, rising an average of 36.5% this past year”