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Hedge fund inflows swell to 9-mo high

Date: Friday, May 13, 2011
Author: Sinead Cruise, Reuters

Hedge funds last month enjoyed their biggest monthly net inflows since August, as investors backed managers to profit from increasing market volatility, indicative data from GlobeOp Financial Services (GO.L) shows.

The GlobeOp Capital Movement Index -- which tracks the monthly net of subscriptions to and redemptions from around $167 billion (103 million pounds) of hedge fund assets under administration -- showed a net inflow of 2.29 percent in the month to May 1 compared with a 0.05 percent net outflow a month earlier.

"After last month's pause, investors continued their steady return to the hedge fund market," GlobeOp Chief Executive Hans Hufschmid said on Wednesday.

The data, which covers around 8 to 10 percent of the global hedge fund industry, reflects a continued recovery in confidence in hedge funds since the financial crisis, which sparked an investor exodus from the sector as asset values plunged.

Gross outflows suffered by hedge funds administered by GlobeOp dropped by two-thirds to 1.03 percent as seen on May 1, against 3.13 percent on April 1.

This compares with net outflows of more than 15 percent recorded for the month to January 1 2009, when investors fled the sector in the wake of the collapse of Lehman Brothers.

Man Group (EMG.L), Europe's largest quoted hedge fund manager, is among the biggest beneficiaries of the recent uptick in demand for hedge fund exposure.

A source close to the company's GLG Partners unit told Reuters last month it was considering shutting one of its convertible arbitrage funds to new investors following a rapid influx of capital.

Earlier this month, Man said it had raised $1.5 billion for a computer-driven, Japan-domiciled hedge fund in its biggest product launch for more than two years.

Total capital invested in the global hedge fund industry exceeded $2 trillion for the first time in its history in April, data published by Hedge Fund Research showed last month.