Martin Currie says hedge flows above pre-crisis levels

Date: Thursday, September 17, 2009
Author: Laurence Fletcher, Reuters

Scottish fund firm Martin Currie is seeing investors put money into its hedge funds at a faster rate than before the credit crisis, an executive told Reuters, in another sign the industry is reviving.

After $300 billion (180 billion pounds) of net client outflows between October and June, there are tentative signs investors are returning to a sector where performance has turned around sharply since 2008's record losses.

Andy Sowerby, managing director of sales, marketing and client service at Martin Currie, which runs $1.2 billion in hedge fund assets, said inflows were at or above levels seen in late 2006 and early 2007, when the industry was near its peak.

"We're seeing steady growth in gross and net new business," Sowerby said in an interview on Wednesday. "They're above pre-crisis levels."

He declined to say how much the firm had seen in inflows.

Appetite for hedge funds, which many investors had expected to be able to make money in good times and bad, has been revived by recent strong returns.

Hedge funds lost an average of 19 percent last year, according to Credit Suisse Tremont, but in the first eight months of 2009 they are up 11.57 percent.

Martin Currie's Japan hedge fund rose 0.8 percent last year and has gained 15 percent so far this year, according to documents obtained by Reuters.

Its Global Resources fund fell 10.2 percent last year and has risen 8.6 percent this year, while its China fund fell 14.4 percent last year and is up 18.6 percent so far this year.

Sowerby said Martin Currie saw net flows turn positive in February and said investors who had pulled out assets last year were returning to hedge funds.

The firm is also winning new business from institutions looking for more control and visibility from portfolios via so-called managed accounts -- separate accounts where investors own the assets rather than units in a fund and can sell assets when they wish.

Sowerby said around 50 percent of Martin Currie's hedge fund assets were held via managed accounts, and he expects this proportion to grow.

"With the crisis there was a much greater focus on transparency, operational infrastructure and liquidity.

"Some clients are coming back and some are reallocating. Managed accounts are growing ... as institutional investors increase allocations to long-short equity."