Hedge funds: Money rolls in after stellar quarter

Hedge funds' inflow in April was nearly five times the rate in March but lower than the amount of investment hedge funds attracted a year ago.

Steve Marcus/Reuters
Hedge Fund Research (HFR) President Kenneth J. Heinz participates in a panel discussion during a Las Vegas conference Wednesday that brought together public policy officials, capital allocators, and hedge fund managers to discuss financial markets. After its best first-quarter performance since 2006, the hedge fund industry lost ground in April.

Investors grappling with volatile financial markets upped their bets on hedge funds over the past month, data from hedge fund administrator GlobeOp shows, indicating renewed confidence in their abilities to cash in on turbulent asset pricing.

Net inflows into hedge funds, as measured by the GlobeOp Capital Movement Index, which tracks monthly net subscriptions to and redemptions from funds managing around $187 billion in assets, rose to 1.24 percent of that total during the month to May 1.

This cash injection was almost five times the previous month's 0.27 percent inflow but significantly lower than the 2.41 percent net inflow seen a year ago and the 2.02 percent and 2.2 percent net inflows recorded in March and February respectively.

Hedge funds lost an average 5.2 percent last year, according to Hedge Fund Research (HFR), after the crisis in the euro zone and worries of a global recession rattled investors and punished all but the most bearish of strategies.

Requests to pull money out of hedge funds dropped on a monthly basis to 2 percent in April, from 3.23 percent in March as more investors backed long-short managers to successfully navigate the latest burst of market volatility.

After achieving its best first-quarter performance since 2006, the hedge fund industry lost some ground in April, as shown by a 0.36 percent drop in HFR's HFRI Fund Weighted Composite Index.

However, the sector still outperformed the Standard & Poor's 500 Index, which fell 0.8 percent in April.

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