Hedge funds kept taking in money at end-2010

By Svea Herbst-Bayliss

BOSTON |
Tue Jan 11, 2011 3:52am EST
BOSTON (Reuters) - Investors poured $13 billion (8.3 billion pounds
of new money into hedge funds in November and likely kept up the pace
with more inflows in December, research firms TrimTabs Investment
Research and BarclayHedge Ltd said on Monday.

November's gains in assets mark the fifth straight month of inflows
as well as the biggest monthly flows since February when hedge funds
took in $15 billion. In October funds took in $10.4 billion.

After a rocky start to 2010, when many prominent fund managers lost
money, returns soon improved, helping spark renewed interest in the
$1.6 trillion industry. June was the only month in 2010 with
outflows, the research firms said.

The average hedge fund gained about 10 percent last year, lagging the
Standard & Poor's 500 index which gained about 13 percent.
Despite hedge funds' more tepid 2010 returns --- in 2009 they rose 19
percent --- and the government's growing insider trading probe which
frightens some investors, researchers at TrimTabs and BarclayHedge
expect demand to stay strong.

"The year ahead looks bright for the hedge fund industry,"
BarclayHedge President Sol Waksman said in a statement. "Investors
continue to pump money into the space."
Several large pension funds, including the state fund in Wisconsin,
are expected to make hedge fund allocations this year.

Even early estimates for December, traditionally a poor month for
money raising, suggest that more money poured in, said Vincent
Deluard, executive vice president of research at TrimTabs. Initial
tallies put inflows somewhere between $5 billion and $15 billion for
the last month of the year. Official numbers will be released in a
few weeks.

Hedge funds reported $3.6 billion in outflows in December 2009 and
$120 billion in outflows in December 2008 during the financial
crisis.
Hedge funds are not required to report returns or assets publicly,
and so research reports like these are watched very closely for any
types of trends.

So-called long-short equity funds that bet on stock price movements
took in $2.5 billion, leading all categories, the firms reported.
Commodity trading advisors (CTAs) posted an outflow of $3.9 billion
in November, the first in nine months, although the redemption was
made by a single large fund, the firms said.
Source: Reuters.Com