While the hedge fund industry received $16 billion in new assets in October, the inflow rate was the lowest since January, with investors pulling an estimated $2.8 billion out of direct hedge fund investments, according to a release from TrimTabs Investment Research and BarclayHedge.
“Although the October inflow was down a bit from prior months, it is stunning to note that year to date, hedge fund flows of $279 billion are more than three times equity mutual fund flows of $79 billion,” said Charles Biderman, chief executive officer at TrimTabs. “Inflows into multi-strategy have been strong all year, but inflows of equity market neutral have been much more volatile.”
The most popular hedge fund categories in October were multi-strategy and equity market neutral, which posted estimated inflows of $3.8 billion and $3.7 billion, respectively.
The least popular hedge fund category in October was fixed income, which lost an estimated $2.2 billion. Fixed income has a year-to-date return of 2.8%, the lowest of any hedge fund category.
The two groups speculated that flows were strong in November because investors were relieved to see better performance numbers in October than the losses posted during the height of the credit crisis in August.
“Recent market turmoil has made investors a bit more cautious about investing in hedge funds,” said Sol Waksman, chief executive officer of BarclayHedge.
Hedge funds are not required to disclose returns or asset flows to industry groups or regulators.