Industry Updates

TrimTabs / BarclayHedge survey: Hedge funds post inflow of $4.0bn (0.3% of assets) in May

Monday, July 12, 2010

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Opalesque Industry Update – TrimTabs Investment Research and BarclayHedge reported that the hedge fund industry posted an estimated inflow of $4.0 billion, or 0.3% of assets, in May 2010, the third inflow in four months. But poor performance drove industry assets to $1.58 trillion in May from $1.61 trillion in April, the first decline since July 2009.

“Performance was poor in May,” said Sol Waksman, CEO of BarclayHedge. “Hedge funds posted a negative return of 3.2%, the worst since October 2008. But flow data won’t show a hit until June because most funds allow redemptions only on a quarterly basis.”

The TrimTabs/BarclayHedge Survey of Hedge Fund Managers for June reveals that only 19% of 127 respondents are bullish on the S&P 500, while 37% are bearish. Only 36% are bullish on the U.S. dollar, down from 49% in May. Additionally, 46% of hedge fund managers cite Spain as the next Greece, while only 20% think Portugal will earn the honor.

“That ranking surprises, as Spain’s credit-default swap premium is smaller than Portugal’s,” said Vincent Deluard, Executive Vice President at TrimTabs. “But our results reveal no ‘homer’ bias - a majority of managers in every geographic region we surveyed like Spain to be the next European domino.”

In May, funds of hedge funds and commodity trading advisors posted inflows for the third straight month. Investors showed a much smaller appetite for risk, as emerging markets funds posted the largest outflow of any strategy as well as their first outflow since July 2009. In contrast, fixed income funds posted an inflow of $2.9 billion, the largest inflow of any strategy.

“Fixed income funds are up 5.1% this year, far and away the best performance of any strategy,” noted Deluard. “But there’s little meat left on that bone. The yield curve has flattened to a level not seen since April 2009, and 10-year Treasuries have dipped below 3%. Moreover, $691 billion in bond mutual funds and ETFs stands ready to flee the sector.”

The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies. Source

BarclayHedge is a leading hedge fund data vendor and one of the foremost sources for proprietary research in the field of alternative investments. From its origin as a research specialist and performance measurement firm, BarclayHedge has developed complete client services as a publisher, database and software provider, and industry consultant. www.barclayhedge.com

TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. www.TrimTabs.com

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