Hedge-Fund Deposits Reach Nine-Month High on Risk Appetite, TrimTabs Says

Date: Tuesday, January 11, 2011
Author: Kelly Bit, Bloomberg

Hedge funds received net deposits of $13 billion in November, the largest since February, as investors took on more risk, according to TrimTabs Investment Research and BarclayHedge Ltd.

Long-short equity funds, whose managers can bet on rising and falling stocks, attracted $2.5 billion, the most among fund categories, the research firms said today in a report. Commodity trading advisers, which bet on the direction of futures, posted withdrawals of $3.9 billion, the first in nine months, because of redemptions from a single large fund.

“The year ahead looks bright for the hedge-fund industry,” Sol Waksman, president of Fairfield, Iowa-based BarclayHedge, said in the report. “Investors continue to pump money into the space.”

Hedge funds gained an average of 12 percent last year, according to the report, compared with the 15 percent return, including dividends, by the Standard & Poor’s 500 Index of large U.S. stocks. The industry oversees about $1.8 trillion, according to Chicago-based Hedge Fund Research Inc.

“We estimate that about 50 percent of hedge-fund managers will collect fees for their performance in 2010,” said Vincent Deluard, executive vice president in New York for Sausalito, California-based TrimTabs. That compares with 32 percent in 2009 and 16 percent in 2008.

Hedge funds pulled in $64.3 billion in 2010 through November.

“We think many managers are likely to invest aggressively in 2011,” Deluard said.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net