Hedge Fund Inflows Continued in March

Emerging Market Strategies Performed Best

Hedge funds returned an average of 0.06% in March and the rate of net investor inflows was again strong. Q1 2011 inflows were the largest since Q3 2009.

Below are early estimates* for March hedge fund performance and asset flows. A full report will be available later in the month.

March Highlights:
•The equal weighted HFN Hedge Fund Aggregate Index was +0.06% in March 2011 and +1.37% year-to-date (YTD). The S&P 500 Total Return Index (S&P) was +0.04% in March and +5.92% in the first three months of 2011.
•Hedge fund assets increased an estimated 0.41% in March to $2.547 trillion. Investors added a net $12.4 billion during the month for a core growth rate of 0.49%. This is a decline from February, but well above the average for 2010. HFN defines core growth as the % increase in AUM due solely to net investor inflows.
•In the first quarter 2011, investors allocated an estimated net $42.4 billion. This is the largest quarterly net inflow since investors allocated a net $53 billion in Q3 2009.
•Emerging markets strategies rebounded in March, led by funds investing in India and Brazil. Despite the strong month, funds investing in China, India and the MENA region are down an average of -1.12%, -6.76% and -4.81% in 2011. Russia focused funds are the leading EM group in 2011, +7.04% in the first quarter.
•Japan focused funds have reported an average loss of -4.80% in March. Of the 43 Japan funds reporting performance for March, 40 reported losses and 18 were down more than 5%. Of those down more than 5%, half were UCITS hedge fund structures.
•Aggregate hedge fund performance was weighed down by CTA/managed futures funds. Natural resource strategies, outside of energy related commodities, dropped an average of -1.22%. Long/short equity strategies were slightly negative during the month.
•In the first quarter 2011, energy sector funds performed best, +6.44%, followed by small cap equity funds, +6.18% and mortgage related strategies, +5.47%.

*Early estimates are based on funds reporting March returns as of April 11th, 2011. Performance has a tendency to drift lower as more funds report. Asset estimates may drift lower, but have not shown a consistent tendency to do so.

HFN’s full March report, to be released in the third week of April, will provide details on high water marks and asset flows by strategy and region.

Click here to read the full report.