The hedge fund industry pulled in USD17.5 billion (1.0% of assets) in April 2011, the fourth straight inflow, according to TrimTabs Investment Research and BarclayHedge. Industry assets increased to USD1.8 trillion, the highest level since October 2008.
“Flows are doubtless following performance,” says Sol Waksman, founder and President of BarclayHedge. “The Barclay Hedge Fund Index posted a positive return in each of the eight months ended April, and investors of all stripes are prone to chase a winning streak.”
Multi Strategy funds hauled in USD5.3 billion (2.5% of assets) in April, the heaviest inflow of all hedge fund strategies. Macro funds received USD3.0 billion (2.6% of assets), the fourth straight inflow, even though these funds have posted a relatively poor return in 2011. Fixed Income funds took in USD1.3 billion (0.7% of assets), the eleventh inflow in 12 months.
“The appetite for bonds appears to be insatiable,” says Vincent Deluard, Executive Vice President at TrimTabs. “Hedge fund investors, ETF investors, mutual fund investors, and speculative traders are piling into the space. This enthusiasm explains why the yield on the 10-year Treasury has plunged to a six-month low.”
The TrimTabs/BarclayHedge Survey of Hedge Fund Managers for May 2011 reveals that managers have turned neutral on US equities. About 30% of managers are bullish on the S&P 500, up from 23% in April, while 29% are bearish, down from 34%. Meanwhile, managers have turned marginally bullish on the U.S. dollar, and 34% plain to increase leverage in the near term.