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“Hedge fund investors have been pouring money into funds,” explains Sol Waksman, founder and President of BarclayHedge. “The industry hauled in $75.0 billion in the first five months of 2011, which marks the heaviest such inflow since 2007. Performance, however, has hardly been stellar. The Barclay Hedge Fund Index shows a year-to-date return of just 2.1% through May, and many managers are in the red for the year.”
Hedge fund investors remain extremely interested in commodities. Commodity trading advisors (CTAs) took in $4.5 billion (1.4% of assets) in May, the sixth straight inflow as well as the fourteenth in 15 months. CTAs have hauled in $28.6 billion (9.0% of assets) in 2011. Meanwhile, funds of hedge funds took in $3.8 billion (0.7% of assets) in May, the fourth straight inflow.
“The investors who have been banking on funds of funds and CTAs have not been rewarded,” notes Minyi Chen, Vice President of Quantitative Research at TrimTabs. “Funds of funds were up only about 1% through May, while CTAs were actually down about 1%. We believe that heavy inflows alongside poor performance often signals that caution is in order.”
Multi-Strategy funds hauled in $2.6 billion (1.2% of assets) in May, the fifth straight inflow and one of the heaviest inflows of all hedge fund strategies. Meanwhile, hedge fund investors continue to flock to fixed income. Fixed Income hedge funds took in $1.4 billion 0.8% of assets) in May, the fifth straight inflow.
“Fixed Income funds are on a remarkable run,” explains Chen. “These funds posted a positive return in 25 of the past 26 months, and they posted an inflow in 12 of the past 13 months. Additionally, bond mutual funds and ETFs, especially Treasury funds, are posting sizable inflows. We are interested to see how investors behave — and how fixed income managers perform — now that the Fed is no longer buying Treasuries.”
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.
