GLOBAL - Investors pumped a net $5.6bn in to hedge funds during the first quarter of 2002 ending the record pace of growth achieved in 2001, according to Tremont Advisers TASS Research.
In its quarterly analysis of industry fund flows, TASS found that investors continued to favour strategies such as event driven and convertible arbitrage, while, for the first time since the end of 1998, long/short equity funds suffered a net loss of assets.
Director of manager research at Tremont Patrick Kelly said: “The first quarter appears to have been a time when hedge fund investors were moving cautiously and re-evaluating their investments.
“More investors were on the sidelines and those committing funds continued to lean toward strategies that could benefit from today’s uncertain market environment. Thus, it was no surprise that distressed strategies were particularly popular again in the first quarter.”
The $5.6bn first quarter net inflow compares with a net inflow of US$8.8bn in the fourth quarter of 2001, a year during which saw a record $31bn in new assets.
Event driven strategies lead asset growth during the first quarter of 2002, gaining $1.95bn of net assets while convertible arbitrage captured $1.66bn. Fixed income arbitrage was the third most popular strategy, adding $710m in net assets.
But long/short equity funds lost a net $407m of assets compared to a net inflow of $1.9bn in the last quarter of 2001. The other strategy to decline in assets in the first quarter was dedicated short bias at $100m.
“Long/Short equity investors were reallocating assets to other types of strategies where the return potential seemed greater,” added Kelly.
Other findings showed emerging markets and managed futures funds continuing to gain assets at $407m and $396m respectively.
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