Tass Reports Yet Another Record Quarter For Hedge Fund Inflows

by Phillip Morton, Investors Offshore.com

27 May 2004

Increasingly strong demand from pension funds and other institutional investors combined with a desire for less volatile and more consistent returns have produced another record quarter for hedge funds inflows, according to Tass Reaserch.

The research unit of Tremont Capital Management revealed that investors ploughed $38.2 billion into hedge funds in the first three months of 2004, beating the previous record of $26.8 billion in new hedge fund assets in the fourth quarter of 2003.

Tass data showed that investors continue to favour equity orientated strategies.

“Several significant trends are driving this phase of the industry’s growth,” noted Robert Schulman, co-CEO of Tremont Capital Management. “Those include a continued strong interest by institutional investors such as pension funds and endowments to make a first or additional investment to alternative strategies.”

“In addition, over the years, 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,” Schulman observed.

By strategy, for the third consecutive quarter Tass reported that Equity Long/Short, Event Driven, and Global Macro were the most popular, pulling in $8.2 billion, $6.9 billion and $5.5 billion respectively. These accounted for around half of the first quarter net inflows.

Tass now estimates that the global hedge fund industry’s asset base stands at approximately $830 billion, plus an additional $200 billion to $300 billion in privately managed accounts.

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