Hedge funds shrink in July as billions walk

Date: Wednesday, September 8, 2010
Author: Reuters

The global hedge fund industry shrivelled a little more in July when investors pulled out nearly $3 billion (1.9 billion pounds) after the loosely regulated portfolios posted losses in May and June, researchers reported on Tuesday.

Assets stood at $1.53 trillion, their lowest level since November 2009, according to data released jointly by TrimTabs and BarclayHedge, firms that track performance and flow data.

"Hedge funds posted a positive return in July, but they did not regain the ground they lost in May and June," said Sol Waksman, founder and president of BarclayHedge. "They also underperformed the S&P 500 by five percentage points," he added.

Worried about a slower than hoped-for economic rebound, investors were quick to cut risk in their investment portfolios by pulling $1.9 billion from funds specializing in emerging markets, the report found.

Meanwhile funds specializing in fixed income strategies -- often favoured during uncertain economic times -- pulled in $1.2 billion. Commodity trading advisors, who generally let computer models drive their trading moves, saw inflows of $3.8 billion.