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Portfolio > Alternative Investments > Hedge Funds

Italian HFs Defy May Fund Outflows

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MILAN, Italy (–Italian investors continued to redirect a portion of their assets toward hedge funds in May. The category ended the month with net inflows of almost 740 million euro ($936 million). The rise in hedge fund investments continued even as all funds posted net outflows of almost 5.2 billion euro over the period.

Italian investments in domestic and foreign hedge funds were almost 24.4 billion euro at the beginning of May, up from approximately 23.4 billion euro a month earlier. In spite of a negative overall performance by hedge funds in May, combined effect of inflows and performance should bring the current level of total hedge fund investment to more than 25 billion euro.

Of the six fund categories examined, only hedge funds and flexible funds (balanced funds where the manager is completely free to set asset allocation) ended the month with net inflows. Flexible funds had inflows approaching 3.8 billion euro, an almost 10% month-on-month advance. Equity and bond funds, balanced and money market funds, all saw outflows exceed inflows in May.

Money market funds and equities funds were the month’s heaviest losers, with outflows of around 3.4 billion euro and 3.1 billion euro respectively, or around 4% and 2% of their respective assets under management.

The negative effect of the May pullback can be seen in the data for all funds. Total assets under management fell from around 617.2 billion to 601.3 billion euro, a 2.6% decline during the month. Outflows accounted for 5.2 billion of this, with the remaining 10.9 billion euro, or 1.8% decline, explained by the negative investment returns over the month.

It must further be noted that hedge fund performance data has not yet been reported for the month. According to the latest data collected by the information provider Mondo Hedge, average hedge fund returns were negative for May, probably in the region of between ?? 1/2 1.2% and ?? 1/2 1.8%, which means that total assets under management may have slipped to just above 600 billion euro.

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Contact Bob Keane with questions or comments at [email protected].


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