Hedge fund global assets fall $170bln

Date: Wednesday, December 3, 2008
Author: Joel Dimmock, Reuters

Global hedge fund industry assets fell by $170 billion (114 billion pounds) in the third quarter as negative returns of more than 10 percent combined with heavy net outflows, research firm Lipper TASS said.

The data provider said that net hedge fund industry asset flows in third quarter reversed the trend of the previous two quarters, dropping to a negative $18.6 billion.

Global hedge fund assets fell to $1.63 trillion at end-September from $1.80 trillion at end-June.

The figures appear to confirm fears that investors spooked by the market turmoil have withdrawn from hedge fund products seen as opaque or too complex. The industry has also generally failed to post positive returns amid the volatility that many were designed to exploit.

All hedge fund substrategies measured by Credit Suisse/Tremont posted negative returns in the quarter.

That said, some funds did attract investment. The Lipper TASS report published Monday showed there were positive flows into Global Macro, Managed Futures, Equity Market-Neutral and Dedicated Short-Bias substrategies in the quarter.

The largest hedge fund substrategy outflows were experienced by Long/Short Equity, Fixed Income Arbitrage, Multi-Strategies and Emerging Markets, which also posted the steepest negative returns during the quarter.

(Reporting by Joel Dimmock)