Hedgie assets up $100bn on stellar gains
HEDGE funds assets grew for the first time in a year in the second quarter, according to data released yesterday, on the back of improved investment performance and a reduction in client withdrawals.
Hedge funds controlled $1.43 trillion (£871bn) in assets at the end of the quarter, up $100bn from a quarter before, according to Hedge Fund Research (HFR).
It was the first sequential rise in assets under management since June 2008, when the industry reached a peak of $1.93.
The data firm said its benchmark index of global hedge fund performance booked a rise of 9.13 per cent over the quarter, the best growth since the last quarter of 1999, as funds snapped out of a spell of massive losses.
HFR president Kenneth Heinz said: “Reflecting the diverse drivers of hedge fund industry performance, recent gains have occurred in an environment in which developed equity markets have been essentially flat.”
The best areas of growth were in funds focusing on developing countries, energy and materials stocks and “convertible arbitrage” funds, which seek to exploit tiny price inefficiencies between different types of stock, he said.
“These three areas were among the weakest performers in 2008, underscoring the dramatic shift in market dynamics that has taken place thus far this year,” added Heinz.
Investors withdrew $42.8bn of investments from hedge funds in the second quarter, approximately 60 per cent less than the $103bn that was redeemed in the first quarter and just a third of the record-beating $152bn withdrawal in the last quarter of 2008.
Meanwhile, a senior European Union lawmaker said that a draft European Union law that will require hedge fund managers to be authorised needs refining to cover other types of alternative investments better.
Sharon Bowles, a Liberal Democrat member of the EU assembly said other types of alternative funds were only now waking up to the fact the draft law – which has been the subject of massive criticism – will apply to them as well and not just to hedge funds and private equity.