Inflows add to optimistic signs for hedge funds
Leading hedge fund managers are beginning to see inflows into some of their most popular products, adding to signs that the industry’s recovery may be gathering pace.
Overall, investors still pulled $104bn (€76.5bn) from the industry in the first quarter, however this represents a sharp slowdown from the $155bn they withdrew in the final quarter of last year. In addition, managers said they are seeing new money come into funds, again a sharp contrast with last year which was virtually a one-way street with money exiting the industry.
Jeff Meyer, chief executive of UK mainstream and hedge fund manager Gartmore, said: “We have been receiving net inflows into our funds again. Funds of hedge funds that have been holding cash in readiness for redemptions are putting it back to work, and institutional investors, particularly in the US, are making big ticket investments.”
Dermot Butler, chairman of hedge fund administrator Custom House, said his clients took money in, on balance, at the end of March. He added: “However, the net subscriptions are more about sentimental bullishness, than someone like [sovereign fund] Temasek suddenly pumping billions into hedge funds.”
Hans Hufschmid, chief executive of GlobeOp, said his clients had taken in about $1bn per month since January, about half what they received before the middle of last year. In last year’s closing quarter investors pulled $16bn from them. Hufschmid said he expects slowing redemption rates this quarter, and modest net inflows.
David Aldrich, European managing director for alternative investment services at the Bank of New York Mellon, said: “Some funds of funds facing $100m of requests were asking to withdraw $200m from underlying funds, because they were not sure if they were going to be gated. Now, some people are cancelling those requests.”
Managers said the news about inflow adds weight to hopes that a recovery, or at least a stabilisation, of the $1.3 trillion industry may be on the way.
Hedge funds overall are up 4.2% this year, including 3.8% last month, said analysts at Hedge Fund Research.
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