Hedge fund assets reach record high on global markets bounce

THE HEDGE fund industry’s total assets reached a record high of $2.13 trillion at the start of this year, new figures show.

Investors put a net $16bn into hedge funds in the first three months of 2012, Hedge Fund Research (HFR) said yesterday.

Funds with fixed income-based relative value or macro strategies had inflows of $12.4bn and $7.8bn respectively.

Managers with assets of more than $5bn won the lion’s share of the new capital, with inflows of $18.3bn.

“Investors responded favourably to the risk shifting which occurred across financial markets in the first quarter, continuing the trend of allocating to arbitrage and macro strategies which exhibit lower directional beta to equity markets,” said Kenneth J. Heinz, president of HFR.

“Sophisticated institutional investors are increasingly allocating to hedge funds as a powerful strategic portfolio complement to existing traditional holdings.”

The record for total assets comfortably beats the $2.04 trillion level, set halfway through last year, and comes after a rocky period for the industry.

The average hedge fund lost 4.8 per cent in 2011 as some of the biggest names in the industry failed to anticipate the longevity of the Eurozone debt crisis.

The industry bounced back in the first quarter of this year, however, as global equity and credit markets rallied, with the average hedge fund gaining 4.94 per cent.