This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Hedge Funds Post Record Inflows

Hedge funds pulled in a record $38.2 billion in the first quarter of the year, the fourth consecutive quarterly high, as the loosely regulated investment pools continue to win over pension funds and other institutional investors.

Hedge funds now manage about $830 billion, according to Tass Research, a unit of Tremont Capital Management. The company said hedge funds drew $72.2 billion last year, also a record.

Robert Schulman, chief executive of Tremont, said inflows through March 31 were largely a result of "strong interest by institutional investors such as pension funds and endowments to make a first or additional investment to alternative strategies."

Because long-short equity hedge funds are among the most easily understood strategies, they were especially popular with investors, who put $8.2 billion into them last quarter. Other popular categories were event-driven funds, which saw $6.9 billion in new money, and global macro funds, which attracted another $5.5 billion, Tass said.

With the Dow Jones Industrial Average down 4.7% for the year to date and the benchmark S&P 500 index off 1.5%, Schulman said more investors were looking for an alternative to conventional investment strategies.

"Investors have become increasingly aware of the volatility of the broad markets and have become very interested in seeking out absolute return strategies that are uncorrelated to the broad markets," he said. "We are continuing to see investors put money to work in the equity markets that may have been on the sidelines as a result of the difficult period that ended in 2002."

But surveying hedge funds, which are largely unregulated, remains an exercise in well educated guesswork. Previous quarterly inflow figures compiled by Hedge Fund Research, a Tass competitor, said $22 billion went to hedge funds in the first three months of the year.

Tass receives data from funds that manage about $542 billion worldwide, which provide their numbers voluntarily. The quarterly surveys estimate there is another $290 billion in other hedge funds that don't report their figures, and an additional $200 to $300 billion in privately managed accounts that use identical strategies.

Proponents of increased regulation of the estimated 6,800 U.S. hedge funds say regulators need a better idea of which managers are managing the estimated $600 billion in domestic funds.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,490.58 -188.12 -1.06%
S&P 500 2,036.55 -20.54 -1.00%
NASDAQ 4,707.0240 -64.7390 -1.36%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs