Investors dramatically cut the amount of new money they put into hedge funds, Reuters said.
Investors put $2.3 billion into hedge funds in December, a sharp drop from $21.8 billion in November, according to
Flows tend to follow performance, and hedge funds are no exception, said TrimTabs Chief Executive Charles Biderman. In November, hedge funds lost 1.7%, which was their worst performance since September 2001. In December, the inflow into hedge funds was the lowest in two years.
Funds that specialize in emerging markets attracted the most money, with $4.4 billion in December, and generated returns of 24% for the year.
The least popular group was merger arbitrage, losing an estimated $2.7 billion, or 7.7% of assets.
Overall, hedge funds brought in $257 billion in 2007, compared with $187 billion collected by stock mutual funds. The most popular categories in 2007 were multi-strategy ($56.8 billion) and emerging markets ($41.7 billion). Equity long/short funds lost $700 million worth of investments.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
