Despite volatile negative performance, investors poured $29.5 billion into hedge funds in the second quarter, nudging industrywide assets up 1.1% on a quarter-to-quarter basis to a record $2.044 trillion, according to data from Hedge Fund Research.
For the six months ended June 30, net inflows to hedge funds totaled $62 billion, the highest half-year inflows since the second half of 2007, when net asset inflows were $75 billion, according to HFR. By way of comparison, net inflows in calendar 2010 totaled $55.5 billion.
“Strong (second-quarter) inflows offset a modest performance-based asset decline,” according to a news release accompanying HFR's second-quarter performance and flows report. The HFRI Fund Weighted Composite was down 0.92% in the second quarter and up marginally, 0.77%, for the six months ended June 30.
“Financial markets continue to be dominated by uncertainty and volatility and investors are allocating to hedge funds, expecting … this uncertain environment to persist,” Kenneth J. Heinz, president of HFR, said in the news release.
“The many catalysts in this environment, including the European sovereign debt crisis, the debate surrounding the U.S. debt ceiling, accelerating Asian inflation, fallout from bank stress tests, and mixed U.S. employment and housing statistics suggest risk is changing faster and more dynamically that ever before,” Mr. Heinz added.