Net hedge fund inflows for the second quarter were $10.9 billion, down significantly from $27.3 billion in the first quarter, according to new Hedge Fund Research data. Second-quarter net inflows did top the $7.5 billion made in second quarter 2004. Total industry assets reached a record $1.25 trillion as of June 30, HFR reported.
The big loser among hedge fund strategies was convertible arbitrage, which had net outflows of $4.15 billion in the second quarter and $5.1 billion for the six months ended June 30. Assets invested in convertible arbitrage hedge funds dropped 15% since the beginning of the year, according to HFR data.
Winning strategies included macro and equity hedge funds, which each attracted $3.2 billion in net inflows in the second quarter. Macro funds attracted a net $6.5 billion in investments in the first six months this year, and equity funds, $7.4 billion.
HFR found that flows into event-driven strategies in the second quarter dropped to $2.5 billion, down from almost $6 billion in the first quarter. Event-driven strategies still attracted the most cash of any hedge fund strategy as of June 30, with $8.4 billion in net inflows.
Hedge funds of funds were also down, with net inflows dropping to $3.5 billion in the second quarter from $9.4 billion in the first quarter. Total hedge fund-of-fund assets now total $375 billion, or about 37% of all hedge fund assets, according to HFR data. Average hedge fund-of-fund performance in the second quarter was 0.29%, compared with 0.8% in the first quarter.
Overall returns were positive for the quarter, with an average hedge fund return of 1.14%, and for the six months ended June 30, with an average return of 1.89% among the funds tracked by HFR.