Date: Thursday, October 21, 2010
Author: Svea Herbst-Bayliss, Reuters
Assets held in hedge funds swelled by $120 billion in the
third quarter.
Assets swelled by $120 billion in third quarter
Investors added $19 bln;
the rest came from performance
Hedge fund industry now manages $1.77 trillion
The loosely regulated industry grew to $1.77 trillion during the third
quarter as assets swelled by $120 billion, the largest quarterly jump in
more than three years, according to data released Tuesday by Hedge Fund
Research.
While investors added $19 billion in new money to global hedge funds --
the largest sum since the fourth quarter of 2007 -- most of the gains were
fueled by strong returns, the data show.
Technology, best practices to limit downtime and risk
HFR tracks performance and flows in the largely secretive hedge fund
industry, and all numbers are closely followed for hints of new trends to
come.
The average hedge fund gained 5.17 percent in the third quarter after
losing 2.67 percent during the previous three months when volatile markets,
fears about slower growth and Europe's debt crisis hurt returns.
Analysts said pension funds and other big investors are adding fresh
money to try to boost returns at a time when alternative investments like
real estate, private equity and hedge funds are being used to diversify
portfolios.
HFR data show investors appear to be chasing performance with their
allocations: relative value, macro strategy and event driven funds pulled in
the lion's share of new money in the quarter and have posted the strongest
returns this year.
Relative value arbitrage funds, where managers hope to gain from price
differentials between related financial instruments such as stocks and
bonds, have gained 8.1 percent this year. Relative value and macro funds
took in $7 billion during the third quarter.
Event driven funds, which have gained 6.7 percent this year, took in $5.7
billion in new money in the quarter, HFR said.
