Hedge Fund Inflows Stabilize in Third Quarter

November 2, 2005 (PLANSPONSOR.com)—Hedge funds grew at a slow pace during the third quarter, with overall growth of 1.6%, a decline from the long term average quarterly growth rate of 2.7%.

In its Asset Flows Report for the Third Quarter of 2005, Tremont Capital Management said that the top performing sector was Emerging Markets, which gained assets at a rate of 7.8%, something which was attributed to the success of markets in Eastern Europe and parts of Asia and Latin America. Event Driven, Long/Short Equity and Multi Strategy schemes all gained assets at a rate over 2% (2.6%, 2.4% and 2.1%, respectively).

However, Convertible Arbitrage, led the strategies with outflows, losing 5.5% of assets during the quarter, although this was better than the 9.2% outflow during the second quarter.    Equity Market Neutral, Global Macro, and Managed Futures also suffered outflows during the period, losing 2.0%, 1.4% and 0.4%, respectively.

The strategies with the greatest net increases to assets during the quarter were Long/Short Equity ($5.6 billion inflow), Event Driven ($3.9 billion) and Emerging Markets ($2.9 billion).

The quarterly Tremont Asset Flows Report is based on an asset base of approximately $800 billion in hedge fund assets.