Investors pull $1.1bn from hedge funds
Hedge funds recorded net outflows of $1.1bn (€691.1m) for the first five months of the year as investors pulled money from a variety of strategies with equity-focused funds topping the list.
Equity hedge funds were hard hit by the downturn in the equity markets for the first half of 2008. The S&P 500 was down 8.43% for June and 11.9% for the half-year.
Investors withdrew $14.6bn from US and European equity hedge funds for the year through May, according to research provider Morningstar.
US equity hedge funds declined 3.3% in June compared with a 2.3% decline for the year to date. European hedge funds fared better with a 0.29% decline in June followed by a 1.8% rise in returns for the first half of the year. Morningstar’s overall equity index was down 2.1% for the half year.
Morningstar analyst Nadia Van Dalen said: “Volatility returned to levels not seen since March amid fears of recession and rising inflation. Most hedge funds are not immune to these economic shocks, despite what their name might imply.”
Hedge funds in the global trend index, which invest in strategies focused on price trends across futures, options and currencies, received inflows of over $6bn in the first five months of the year, benefiting from commodity price rises.
Investors also poured $2.4bn into global non-trend strategies making bets on interest rate and currency fluctuations. Returns for hedge funds in this category were driven by the downturn in the dollar against the Euro, according to Morningstar.
The global trend hedge fund index outperformed other strategies tracked by Morningstar, with returns of 15.28% for the first half of the year and 3.3% last month.
Global non-trend funds were relatively flat at 0.44% for June, but were up 5.2% for the half year.
Morningstar tracks 8,500 hedge funds and fund of hedge funds.
Its Morningstar 1000 Hedge Fund Index, which tracks the top 90% of eligible assets, had a 0.73% decline in returns while the half-year remained relatively flat with a 0.31% increase.
Hedge funds had their worst performance in 18 years for the half year, according to data provider Hedge Fund Research in what has been a particularly volatile market.
del.icio.us
Digg
Newsvine
reddit
StumbleUpon
