Hedge Funds Continued To Grow In Third Quarter

Investors Offshore, London

03 December 2002

Hedge fund research house Tremont has published its analysis of fund flows covering the third quarter of 2002, showing that the flood of cash into alternative investments continued unabated. A net $6.8 billion was added to hedge fund assets during the period, bringing total net inflows this year to just under $17 billion.

Tremont's TASS ResearchTM report says that investors continued to favor Long/Short Equity, Fixed Income Arbitrage and Event Driven strategies. Long/Short Equity attracted $2.1 billion, followed by Event Driven with $1.7 billion and Fixed Income Arbitrage with $1.1 billion.

"It was a good quarter for hedge funds as investors sought to allocate assets to strategies that would preserve capital better than long-only strategies," said Barry Colvin, President and CIO at Tremont. "Distressed investing continued to attract interest given the difficult economic environment and Fixed Income Arbitrage typically provides opportunities during uncertain times."

John Hock, Tremont's Director of Global Sales, says that another reason for the positive inflows into hedge funds this quarter relates to increasing interest from institutional investors. "We believe that hedge fund flows are being favorably impacted by more institutional allocations. There continues to be a steady stream of interest from a variety of institutional investors who are looking for ways to allocate capital to strategies uncorrelated to the major markets."

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