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Hedge Funds Pull in $6.1 Billion in August, Seventh Inflow in Eight Months. Fixed Income Hedge Funds Boast Best Returns and Heaviest Inflows

“Recent inflows might owe in part to excellent relative performance,” says Sol Waksman, founder and President of BarclayHedge.  “While the S&P 500 plunged 10.6% in the four months ended August, the Barclay Hedge Fund Index decreased only 5.6%.  Additionally, our preliminary data for September reveals that hedge funds outperformed the S&P 500 by more than a 2:1 margin again last month.”

Fixed income hedge funds are wildly popular.  These funds posted an inflow in 13 of the past 14 months and have raked in $14.6 billion in 2011, the heaviest inflow of all hedge fund strategies.  Fixed income hedge funds have also returned 3.6% in 2011, the best performance of all strategies.

“Prices have been soaring in many segments of the fixed income space,” notes Leon Mirochnik, Associate Portfolio Manager at TrimTabs.  “The flow data we track daily shows that TIPS ETFs sport a handsome year-to-date return of 10.4%.  Even lowly muni ETFs, which are up 7.0% in 2011, have crushed stocks.  Additionally, the yield on the 10-year Treasury recently plunged to 1.72%, the lowest level on record, from 3.75% in February.”

The latest TrimTabs/BarclayHedge Survey of Hedge Fund Managers shows that managers have reversed their stance on long-dated Treasuries.  Bullish sentiment on the 10-year note rose to 23% in September from 15% in August, while bearish sentiment sank to 16% from 32%.  Meanwhile, managers are extremely sour on domestic equities.  Bearish sentiment on the S&P 500 soared to 57% from 42%, while bullish sentiment plunged to 16% from 27%.  Additionally, managers are very upbeat on the U.S. Dollar Index (59% bulls against 9% bears).

TrimTabs/BarclayHedge Survey

“Hedge fund managers have zero interest in risk at present,” notes Mirochnik.  “They are clinging to the safety of Treasuries and the greenback and stiff-arming stocks.  Nevertheless, hedge fund investors are forking over fresh cash, and managers must put it to work.  This money could support equities in the final quarter of 2011, especially if hedge fund managers lever up in an attempt to end the year with a bang.”

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.