10 May 2010
TrimTabs Investment Research and BarclayHedge reported that the hedge fund industry posted an estimated inflow of $7.6 billion, or 0.5% of assets, in March 2010. Hedge fund assets stand at a 16-month high of $1.64 trillion.
Multi-strategy funds posted the largest outflow (1.3% of assets) in March, while event-driven funds posted the biggest inflow (1.5% of assets). Event-driven funds show a year-to-date return of 4.7%, one of the largest of all fund strategies.
In the March Hedge Fund Flow Report, TrimTabs found that a strong historical relationship between hedge fund flows and returns weakened dramatically since the credit crisis in 2008. The firm believes stricter leverage requirements and proposed industry regulation are depressing inflows. TrimTabs analysis also shows that the volatility of hedge fund returns fell sharply in the past year.
“The Barclay Hedge Fund index, which measurers performance, is up 29.9% in the past 13 months,” said Sol Waksman, CEO of BarclayHedge. “Hedge funds returned an average 2.9% in March, the best performance since September 2009.”
Multi-strategy funds posted the largest outflow (1.3% of assets) in March, while event-driven funds posted the biggest inflow (1.5% of assets). Event-driven funds show a year-to-date return of 4.7%, one of the largest of all fund strategies.
“We’ve seen a stark shift to the riskiest strategies from the most conservative ones,” said Vincent Deluard, Global Equity Strategist at TrimTabs. “Aggressive bets have paid handsomely, and flows are following performance.”
Deluard warned, “We fear that systemic risk is greater than most market participants realize. As recent market action highlights, small shifts can quickly lead to disproportionate losses when everybody’s betting the same way.”
In the March Hedge Fund Flow Report, TrimTabs found that a strong historical relationship between hedge fund flows and returns weakened dramatically since the credit crisis in 2008. The firm believes stricter leverage requirements and proposed industry regulation are depressing inflows. TrimTabs analysis also shows that the volatility of hedge fund returns fell sharply in the past year.
