Hedge Funds Kept Head Above Water In September

by Carla Johnson, Investors Offshore.com, London

04 October 2007

Despite sub-prime woes, hedge funds seem to have had a reasonable September, and continued to take in money during August, although at a slower rate than earlier in the year.

US data provider Hedge Fund Research's investible index showed a positive return for investors of 0.85% net of fees for the month to September 26, and the firm reported that, of the eight hedge fund strategies it covers, six had made a profit in September. Global macro and managed futures was the best performer with a 3.24% return, while convertible arbitrage gained 2.34%. Equity market neutral funds and distressed securities funds were both down on the month.

TrimTabs Investment Research and BarclayHedge said that their universe of hedge funds, with an estimated $1.9 trillion in assets, pulled in a net inflow of $8.9 billion in August, way below July's $39.1 billion inflow.

Funds of funds took in an estimated $24.5 billion, while direct investors pulled out an estimated $15.6 billion, said TrimTabs. “Many investors were probably nervous about putting fresh cash to work until they could assess the fallout from the sub-prime mortgage mess,” said Conrad Gann, TrimTabs president.

“Given the turmoil in the credit markets, it is not surprising that fixed income hedge funds posted the biggest outflow, losing an estimated $1.7 billion,” added Gann. The most popular hedge fund category was multi-strategy, which received an estimated $6.2 billion.

The TrimTabs report provides updated information on more than 5,500 hedge funds, out of a probably universe of more than 10,000 funds, which together are supposed to have more than $1.5 trillion in assets.

Recommended