Hedge funds continue to pile up assets and break their own records as inflows for the second quarter reached $43.3 billion, according to Tremont Capital Management's TASS Research.
The second quarter was the fifth consecutive record in quarterly net inflows, says TASS Research, coming on the heels of net inflows of $38.2 billion in the first quarter of the year. In 2003, the global hedge fund industry as measured by TASS grew by $72.2 billion in net assets.
The three most popular strategies for the quarter, on the basis of net inflows, were long/short equity, event-driven and global macro, which took in assets of $13.5 billion, $7.7 billion and $6.3 billion, respectively. The three strategies also accounted for more than half of the quarterly net asset flow.
"The second-quarter inflows indicate investors' extraordinary appetite to participate in equity markets in light of strong performance last year and earlier in 2004," said Barry Colvin, president and chief investment officer of Tremont Capital Management. "Our research reflects that both institutional and qualified individual investors were allocating assets to hedge funds last quarter, and the interest came from the U.S. and overseas."
Colvin said hedge-fund investors continue to favor equity-based strategies over convertible arbitrage and fixed-income arbitrage funds, which saw lower levels of net inflows last quarter compared with earlier periods.
TASS' quarterly report on hedge-fund flows is based on a comprehensive analysis of about $575.8 billion in hedge fund assets. TASS currently estimates the global industry's asset base at about $870 billion, with an additional $260 billion estimated to be in privately managed accounts.
About 6,800 hedge funds now operate in the U.S.