CHICAGO (HedgeWorld.com)–Hedge funds brought in $42.1 billion in new assets in the second quarter, according to numbers released Thursday by Hedge Fund Research Inc. It was the largest single-quarter inflow HFR has seen since it began tracking asset flow figures in 2003.
The new assets brought the estimated size of the hedge fund industry to $1.225 trillion, HFR said.
“As the data shows, this was an extremely impressive quarter for hedge funds from an asset flow perspective,” said Joshua Rosenberg, president of HFR, in a statement. “Nearly all strategies saw positive flows as investors continued to demonstrate their confidence in the industry.”
Equity hedge strategies were the biggest gainers, according to HFR’s figures, taking in more than $13 billion in new assets. Macro funds took in $8.4 billion, while event-driven strategies collected $4.8 billion in new money. Convertible arbitrage managers, who are performing well so far in 2006 with a 6.29% return through the end of June, saw inflows of $3.3 billion. Merger arbitrage managers were up 2.09% in the second quarter and are up 8.59% for the year, so the fact that they attracted some $3.6 billion in new assets isn’t too surprising.
Flows of assets into funds of funds increased, too, with the multi-fund managers collecting $15.6 billion, more than double the $6.4 billion they took in during the first quarter.
On the downside, fixed-income arbitrage saw outflows of $164 million.
Performance-wise, the second quarter was mediocre. The HFRI Composite Index rose just 0.17% after gaining nearly 6% in the first quarter, according to HFR. For the year the index is up 6.16%, compared to the Standard & Poor’s 500 stock index, which is up 2.71% for the year, and the Morgan Stanley Capital International World Index, which is up 4.95%.