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“The year ahead looks bright for the hedge fund industry,” said Sol Waksman, founder and President of BarclayHedge. “Hedge funds returned 11.6% in 2010, and investors continue to pump money into the space. Additionally, we suspect pension managers will need to chase active returns because plans are underfunded and market yields are far too low to get the job done.”
Equity long-short funds hauled in $2.5 billion (1.3% of assets) in November 2010, the heaviest inflow of any hedge fund strategy, while event driven funds took in $2.2 billion (1.0% of assets) and emerging markets funds received $1.8 billion (0.8% of assets). Meanwhile, fixed income funds attracted $1.9 billion (1.2% of assets), the seventh straight inflow.
“Hedge fund investors have been much less bearish on bonds than mom and pop,” explained Vincent Deluard, Executive Vice President of Research at TrimTabs. “Retail investors have been dumping muni, Treasury, and multisector bond mutual funds since prices started to tank, but seasoned market participants have yet to redeem fixed income assets. We are fundamentally bearish on bonds, but we expect to see bouts of bullishness when the economic outlook seems uncertain and crises in Europe bubble to the surface.”
Commodity trading advisors (CTAs) posted an outflow of $3.9 billion (1.4% of assets) in November, the first in nine months, although the redemption owed to a single large fund. Funds of hedge funds took in $473 million 0.1% of assets), the fifth straight inflow. Meanwhile, hedge fund managers could help juice equities in 2011.
“We estimate that about 50% of hedge fund managers will collect fees for their performance in 2010,” noted Deluard. “This is better than just 32% in 2009 and only 16% in 2008, but it is nowhere near the record 90% we saw in 2006. We think many managers are likely to invest aggressively in 2011. If they do, their purchasing will be a plus for asset prices.”
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.
