Hedge fund strategies received $4.6 billion from investors in the second quarter, roughly $1 billion less than in the first quarter, according to a report from TASS Research, part of Tremont TASS (Europe), a subsidiary of Tremont Advisers. Long-short equity hedge funds received the most new money, nearly $1.5 billion. Convertible arbitrage received $935 million in new assets and multistrategy funds, $496 million, according to the report.
"Investors were clearly steering toward strategies that can benefit from a declining equity market," said Patrick Kelly, Tremont director of manager research.
New assets flowing into event-driven strategies slowed because investors appeared uneasy with the creditworthiness of many companies following a string of accounting scandals, according to the report. Growth in fixed-income assets slowed because interest rates are expected to rise. Asset flows into equity market-neutral funds slowed because of capacity constraints.
Long-short equity is the most popular strategy, based on assets, with 43% of the total hedge fund assets at the end of the second quarter. The second-most popular is event-driven strategies, with 19% of assets.