The hedge fund industry gained an estimated $11.6 billion in net assets during the second quarter, the industry's smallest net quarterly inflow in three and a half years, according to research compiled by Tremont Capital Management. The firm estimates global hedge fund assets around $1 trillion as of June 30. Hedge funds posted a net gain of roughly $25 billion in assets during the first quarter and about $45 billion in the fourth quarter of 2004, said Robert Schulman, CEO of Tremont Capital. "Along with the reduction in returns," Mr. Schulman said, hedge funds are experiencing a reduction in assets.
Multistrategy, event-driven and fixed-income arbitrage strategies attracted the largest amount of net assets in the second quarter, posting net inflows of $6.3 billion, $3.9 billion and $1.8 billion, respectively. Convertible arbitrage recorded a $2.9 billion net loss in assets during the second quarter, and managed futures posted a roughly $1 billion net loss for the quarter, according to the firm's research.
The quarterly Tremont Asset Flows Report is based on information from 3,000 hedge funds with about $735 billion in combined assets.