Q3 Hedge Fund Inflows Push Yearly Number over $100 Billion

November 18, 2004 (PLANSPONSOR.com) - Funneling money into strategies that offer less capacity constraints, hedge funds investors put $25.1 billion into the alternative investment vehicles in the third quarter.

The large inflow put the yearly number at over $100 billion, with the first and second quarter inflows reaching $38.2 billion and $43.3 billion, respectively, according to Tremont Capital Management’s TASS Research. The company now estimates that the amount of money invested globally in the hedge fund universe is $890 billion, with another $265 billion invested in managed accounts.

The majority of the money is flowing into Long/Short Equity ($6.9 billion), Global Macro ($4.2 billion), and Event-Driven ($4.6 billion) strategies, which are often characterized by broad investment latitude and less capacity constraints, according to TASS Research. With a shortage of managers in other styles, such as Equity Market Neutral, more and more investors have been pushing their money into these three strategies.

The TASS Research report indicates that Convertible Arbitrage funds have seen net outflows in recent months due to lackluster performance in the area.

TASS Research, owned and operated by Tremont Capital Management, provides data and research on approximately 6,200 hedge funds.