Hedge funds attract over $5bn inflows in May but performance losses cancel out gains

Date: Friday, June 18, 2010
Author: Hedge Funds Review

Investor allocations to hedge funds reached $5.44 billion in May 2010 but were offset by performance-based losses of $16.68 billion, according to Eurekahedge.

The Eurekahedge Hedge Fund Index was down 2.33% in May but the industry saw net inflows for the fourth consecutive month as investors rewarded funds for a strong start to the year.

Eurekahedge also said in its May report that Ucits-compliant hedge funds attracted $5 billion of capital in the first five months of 2010.

North American managers saw the biggest inflows in May, attracting $4.9 billion. That meant assets under management (AUM) in North America remained above $1 trillion after hitting this benchmark in April.

Investors pulled $600 million out of Latin American managers during May. Managers in this region were the only ones to suffer outflows in the last month.

Commodity trading advisers (CTAs) and managed futures funds were the most popular among investors in May, attracting net inflows of $9 billion. Distressed debt, fixed income, macro and relative value funds also saw net inflows from investors seeking to avoid the equity markets.

Eurekahedge said the same risk aversion was the reason for net outflows of $10.7 billion from event-driven strategies. Long/short equity funds lost $4.9 billion and arbitrage and multi-strategy funds also experienced outflows.

Although hedge funds as a group saw a drop in performance in May, the Eurekahedge index is up 0.78% year-to-date and is comfortably outperforming equity markets.