Tremont Reports Healthy Q1 Hedge Fund Inflows

by Carla Johnson, Investors Offshore.com

09 May 2006

Tremont Capital Management Inc.'s Asset Flow Report for the First Quarter of 2006 has showed a $27.6 billion net inflow across all investment styles for the first quarter of 2006.

According to the report, Emerging Markets assets increased at a rate of 7.97%, to become one of the hedge fund sectors that attracted the most assets in the first quarter at $4.4 billion.

Managed Futures, with inflows of $1.7 billion, and Long/Short Equity, with inflows of $12.3 billion, were also strategies that were popular with investors in the first quarter. The aggregate asset inflow for Emerging Markets, Managed Futures, Long/Short Equity and Global Macro was $21.3 billion for the quarter.

At the other end of the scale, Convertible Arbitrage continued to suffer, posting a net loss of 3.88% in the first quarter; although this is down from the same period last year when the outflows recorded a -5.75% change in assets.

"Between traditional and hedge fund assets, inflows into the emerging markets in the first quarter are running ahead of 2005 as a whole," noted Cynthia Nicoll, Chief Investment Officer of Tremont Capital Management.

She went to observe that:

"As investors worry about the stability of these flows, and the broader imbalances of the global economic and political landscape, assets have gravitated towards Global Macro and Managed Futures, possibly seeking some diversification, yet they have invested primarily in equity and commodities themes.”

“While Long/Short Equity and Event Driven managers have benefited globally from the emergence of strong merger and acquisition activity, access to these opportunities has come predominately in directionally biased equity trades rather than the risk arbitrage trades."

“And, as the commodities story is inextricably linked to the Emerging Markets theme, correlations exist here as well."

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