| Flows into hedge funds increase |
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| 07/07/2003 | |
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Aggregated flows for all hedge fund strategies more than doubled compared to the final quarter of 2002, according to a poll of 67 global hedge fund managers conducted by LJH Global Investments and Reuters. The results of the first quarter 2003 hedge fund manager poll found that investors put $1.4bn into hedge funds which represents a significant increase over the previous quarter's inflows of $596mn. Possible explanations include the fact that the war in Iraq reached a conclusion "in an acceptable time frame" and that corporates earnings, while not strong, are surprisingly upbeat. "The flows appear to be up fairly dramatically but sticking with safe havens is what it is all about now," said LJH President and Chief Investment Officer James R Hedges. Yet While hedge funds are steadily growing in popularity, there are increased concerns about risk management and the use of leverage to boost returns has declined, the survey shows. In the first quarter, investors put $878.8m into equity hedge funds, and $101.0m into equity market neutral funds, two strategies that attempt to reduce risk of "pure" hedge fund strategies. This follows the pattern of 2002 when investors put $470m, the bulk of the $596m they put into all funds, into equity market neutral, said Reuters. For the second quarter in a row, short-biased funds did not benefit from inflows and commodity trading advisers received just $50.1m. Global macro hedge funds, which delivered the best returns in 2003, received only $36.8m. During the first quarter, fund of hedge funds benefited from the largest monetary inflows at $371.8m, up from $283.8m in the last quarter of 2002. High net worth individuals invested $265.9m in hedge funds, and pension funds put in $99.8m, the same as last quarter, Reuters' poll noted.  |
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