Investor interest in hedge funds was strong again in August, with support from fixed income and commodity strategies, according to research by HFN.
The HFN Hedge Fund Aggregate Index was up 0.41 per cent in August and is up 2.16 per cent in the first eight months of 2010.
The S&P 500 Total Return Index was down 4.51 per cent in August and is down 4.63 per cent year-to-date.
Hedge fund assets increased an estimated 0.86 per cent in August to USD2.268trn. Investor flows accounted for an estimated net increase of USD6.92bn, the third highest monthly net investor inflow in 2010. Performance added an additional USD12.48bn.
Net investor flows in August were positive for the second positive month in a row following the industry’s first net outflow of 2010 in June. The continuation of net inflows is an important sign of support as the trend in the first half of the year was of declining rates of growth.
Fixed income and commodity focused funds’ returns supported aggregate hedge fund performance in August. Funds investing in mortgage related securities and those with long exposure to precious metals performed best.
Long-biased equity strategies lagged aggregate hedge fund returns in August, but the HFN Long/Short Equity Index outperformed the S&P by a large margin. Funds investing in the technology sector produced the best sector specific equity performance in August while healthcare funds trailed.
Emerging market fund returns were mixed and aggregate returns were negative due to losses in EM equity funds.
