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Hedge fund assets climb 4% in second quarter: HFN

Date: Tuesday, August 19, 2008
Author: James Langton, Investment Executive

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Total hedge fund assets increased an estimated 4.41% in the second quarter to US$2.973 trillion, According to a new report from HedgeFund.net (HFN).

HFN reports that investors allocated an estimated US$34.21 billion to hedge funds in Q2 and performance gains added an additional US$91.28 billion to total assets. The dollar amount of fund liquidations during Q2 was larger than new fund launches by an estimated US$8.52 billion; the third highest level of fund closures on record, it noted.

Fund of funds experienced a net withdrawal of investor assets in the quarter, as liquidations were greater than new fund launches and allocations to existing funds by an estimated US$470 million. However, performance gains actually lifted total FoF assets to an estimated US$1.439 trillion, an increase of 2.43% from the prior quarter.

Hedge funds located in Europe saw the largest rate of organic growth. New allocations of US$21.47 billion to funds located in Europe increased total assets by 2.62%, it said. Combined with performance gains, total European hedge fund assets rose an estimated 4.80% to US$857.65 billion. Funds operating in Asia saw total assets fall an estimated US$3.12 billion from a combination of performance losses and investor withdrawals.

HFN also reported that, for the third consecutive quarter, investors have reduced allocations to equity strategies and increased allocations to fixed income related strategies. Funds focusing on corporate fixed income related securities accounted for the majority of the increase.

On a strategy basis, event driven and special situations funds experienced record growth in Q2, and distressed securities funds also enjoyed organic growth of 4.05%.