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November 3, 2005
Net inflows into hedge funds stabilizes; Industry grows at 1.6% for the third quarter
Third quarter hedge fund asset flows were announced by Tremont Capital Management, Inc. in its Asset Flows Report for the Third Quarter of 2005.
According to the Report, Emerging Market hedge funds gained assets at a 7.8% rate as investors increased allocations to this top performing sector.
Convertible Arbitrage, although continuing to trail with outflows of 5.5% of assets during the quarter, showed improvement over the 9.2% outflow it suffered during the previous quarter, as fundamental factors improved and some funds in the strategy saw net inflows.
"The third quarter of 2005 showed the stabilization of net inflows to the industry as a result of improved performance in the third quarter. While investors' overall interest in hedge funds is regaining momentum, it's growing at a slower rate than the long term average quarterly growth rate of 2.7%," said Robert Schulman, CEO of Tremont Capital Management.
The Asset Flows Report showed that, for the third quarter, the strategies that attracted the greatest amount of net assets in absolute terms were Long/Short Equity, Event Driven and Emerging Markets strategies, showing inflows of $5.6 billion, $3.9 billion and $2.9 billion, respectively.
Style Asset Flows as a % of AUM Q3 2005
Emerging Markets 7.8%
Event Driven 2.6%
Long/Short Equity 2.4%
Multi Strategy 2.1%
Fixed Income Arbitrage 1.5%
Dedicated Short Bias 0.7%
Managed Futures -0.4%
Global Macro -1.4%
Equity Market Neutral -2.0%
Convertible Arbitrage -5.5%
All Styles 1.6%
The researchers believes that the expertise and flexibility of the Long/Short Equity manager is attractive to investors concerned about the instability of the current markets.
Likewise, that sense of caution has led investors back to strategies usually shown to work in challenging markets such as Event Driven and Multi-Strategy.
As far as the gains in Emerging Markets, the researchers attribute them to the success of markets in Eastern Europe and parts of Asia and Latin America -- including China and Brazil.
The quarterly Tremont Asset Flows Report is based on an asset base of approximately $800 billion in hedge fund assets.
The universe represents a broad array of managers and funds located in the U.S. and overseas. Tremont currently estimates the global industry's assets to be at approximately $1.05 trillion.
Posted by su at November 3, 2005 5:21 PM