The flow of money invested in hedge funds slowed in the first quarter, according to Tremont Advisers TASS Research. Only $5.6 billion in new money was invested in hedge funds in the first quarter, down from $8.8 billion in the fourth quarter of 2001. A record $31 billion in new assets poured into hedge funds last year.
Event-driven strategies netted nearly $2 billion in new assets, followed by convertible arbitrage at $1.7 billion. Meanwhile, investors reallocated from long-short equity funds, which lost a net $407 million in assets in the fourth quarter vs. a gain of $1.9 billion in the last quarter of 2001.
"The declining interest rate environment of 2001 boosted returns for such strategies as convertible arbitrage and fixed-income arbitrage, Ed Hannon, research specialist at Tremont, said in a press release.