RYE, N.Y. (HedgeWorld.com)–Hedge funds gained US$6.8 billion in new assets in the third quarter bringing net inflows to the asset class to US$17 billion for the year through Sept. 30.
According to the research compiled by Tremont’s TASS Research*, hedge fund investing is picking up again after a lackluster first half of the year, which showed a slowdown in asset flows from the record growth of 2001. Long/short equity funds and convertible arbitrage strategies lead the second quarter growth with US$4.57 billion in new assets.
Investors continue to be attracted to long/short equity, fixed-income arbitrage and event-driven strategies. Long/short equity attracted the most assets with US$2.1 billion, while event-driven and fixed-income arb followed with US$1.7 billion and US$1.1 billion, respectively.
According to Tremont officials, the reason for positive inflows relates to increasing interest from institutional investors. “There continues to be a steady stream of interest from a variety of institutional investors who are looking for ways to allocate capital to strategies uncorrelated to the major markets,” John Hock, Tremont’s director of global sales, said in a statement.
A number of pension funds either invested in hedge funds or are considering hedge funds for the first time. Small public pension funds seem to be following the lead of their larger counterparts with funds like Brockton (Mass.) Contributory Retirement System (Previous HedgeWorld Story) Lincoln (Neb.) Firemen’s and Policemen’s Retirement System (Previous HedgeWorld Story) investing in hedge funds of funds. Also the multi-billion dollar pension funds like California Public Employees’ Retirement System continue to fill their hedge fund mandates.
The TASS report is based on data that includes 3,216 funds. Of that group of funds, 1,158 represent funds that were in existence during some portion of time between January 1994 and September 2002, but are no longer in operation.
*TASS Research is the information and research unit of Tremont Advisers Inc., Rye, N.Y., which is a minority investor in and strategic partner of HedgeWorld.