“Investors were very kind to hedge funds in the first half of the year,” says Sol Waksman, founder and President of BarclayHedge. “The industry raked in $73.0 billion (4.0% of assets), which goes down as the heaviest first-half inflow since 2007. But we wonder if strong inflows will persist through the remainder of the year in light of the recent bloodbath in equities.”
Fixed Income hedge funds hauled in $15.1 billion (7.9% of assets) in the first half of 2011, the second-heaviest inflow of all hedge fund strategies. These funds took in money in 13 of the past 14 months and returned 4.9% in the first half of the year, the second-best performance of all strategies.
“Fixed Income funds are on fire,” notes Minyi Chen, Vice President of Quantitative Research at TrimTabs. “Keep in mind that hedge fund managers, alongside most other segments of the market population, have been bearish on the long end of the curve all year. Nevertheless, the yield on the 10-year Treasury has plunged to 2.36% from 3.75% in February.”
Multi-Strategy hedge funds raked in $15.2 billion (7.2% of assets) in the first half of 2011, the heaviest inflow of all hedge fund strategies, even though they posted a mediocre return. Similarly, Macro funds and Emerging Markets funds posted two of the heaviest inflows despite turning in the two worst performances of all hedge fund strategies.
“We see lopsidedness between performance and flows regularly in not only our hedge fund flow data but also our retail and institutional flow data,” notes Chen. “These imbalances are predictive more often than not. We believe investors should consider investment candidates that are performing well but not attracting heavy inflows. Similarly, we fear any asset class into which investors keep flocking despite poor returns.”
The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies. Click here for further information.
BarclayHedge is a leading hedge fund data vendor and one of the foremost sources for proprietary research in the field of alternative investments. From its origin as a research specialist and performance measurement firm, BarclayHedge has developed complete client services as a publisher, database and software provider, and industry consultant.
TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit us here.