Hedge fund investors in the third quarter favored long-short equity funds, which took in $3.5 billion, or 84%, of new assets going into hedge funds for the period, according to figures from TASS Research, the research subsidiary of Tremont Advisors. Event-driven hedge fund strategies took in $1.6 billion, or 38% of new assets, in the third quarter. Money flowed mainly into the risk arbitrage subsector in the United States and Europe. Investors committed $4.2 billion in new assets to hedge funds in the third quarter, compared with $4.9 billion in the second quarter.
Distressed securities experienced net outflows in the third quarter as investors became increasingly concerned about the growing supply of undesirable paper and falling demand, according to TASS. Investors continued to be cautious about global macro funds, redeeming nearly $1.4 billion in the quarter. In addition, managed futures had outflows of $272 million for the third quarter; emerging markets, $133 million; and short selling, $66 million.
