Hedge funds rake in $126.5 billion

Date: Friday, January 19, 2007
Author: Aaron Seigel, InvestmentNews.com

Hedge fund inflows for the quarter ended Dec. 31 were $15.8 billion in a year that brought in a record $126.5 billion of hedge fund inflows, according to data released by Hedge Fund Research Inc. in Chicago.

Industry-wide returns for hedge funds averaged a 5.4% increase in the fourth quarter and 12.85% for all of 2006.

"We continue capital to flow into energy and relative value strategies and the data shows that performance in those areas continues to be good in an aggregate sense," said Ken Heinz, president of HFR.

"We still have to wait to see how flows play out into 2007 to see if there is a longer lag in inflows nationwide."

The quarter began a couple of weeks after hedge fund Amaranth Advisors LLC -- which had assets of $9.2 billion in August -- collapsed in September on a series of bad energy trades.

"It is still unclear if the collapse had a meaningful impact and it has not showed up in the data yet," he added.

Despite the collapse, the fourth quarter $15.8 billion total inflows were stronger than $800 million in total outflows during the same period in 2005.