GLOBAL – Hedge fund assets are now almost 665 billion dollars, a record, according to Hedge Fund Research.
Chicago-based HFR said in a quarterly report that hedge fund assets rose by 47 billion dollars in the second quarter, with just 1.4 billion dollars of that coming from new assets.
“Hedge Fund strategies generally performed well during the quarter, on the heels of stronger economic data and a rally in the equity markets,” HFR said. It said the most notable strategies were long-biased strategies. It said the market upturn meant that short-selling strategies fell 12.3% in the quarter.
Mercer Investment Consulting has estimated that only around 0.5% of pension fund assets are allocated to pension funds.
HFR added that fund of funds gained more than 87 billion dollars in net assets on the quarter – which it called the largest quarterly influx of net assets this year.
The total number of funds has risen to 5,660. “HFR estimates that 281 new funds have been launched since the beginning of 2003.”
Meanwhile a separate survey, conduced by LJH and Reuters, found that international investors cut their allocations to hedge funds by 14% to 1.2 billion dollars in the second quarter. The LJH-Reuters poll of hedge fund managers found that investors “more than doubled investments in the safest alternative strategies”.
The survey polled 64 US-based hedge funds about the allocations of their domestic and international clients. “The findings highlight a change in investor appetite triggered by a quick end to the Iraq War and signs that the US economy appears to be picking up speed,” the two companies said.