Hedge funds may be at tipping point

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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 11, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Hedge funds may be at tipping point
The US$1.4t hedge fund industry last year posted record poor performance

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</TD></TR><TR><TD bgColor=#fffff1><TABLE cellSpacing=0 cellPadding=0 width=124 align=center border=0><TBODY><TR><TD vAlign=top>In Q4 of 2008, investors pulled out a net US$150b, while many investors were unable to get out all their money.
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</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>HSBC Global Asset Management says it is finally seeing inflows into some of its hedge funds and believes it may have reached a 'tipping point' after a tough period of client withdrawals.
Bill Maldonado, head of alternative investments at the firm's active investment arm Halbis, said in an interview that the wider hedge funds industry was likely to be seeing a similar stabilisation in flows.
'We saw a lot of redemptions in the fourth quarter of last year, we saw far fewer redemptions in the first quarter of this year, and we're now just seeing the first net inflows into some of our strategies, and I suspect that's fairly typical,' Mr Maldonado said on Thursday. 'I think for our combination of strategies we've got to some kind of tipping point.'
His comments follow a tough period for the once-booming US$1.4 trillion hedge fund industry, which last year posted record poor performance with an aggregate 19.02 per cent loss, according to Hedge Fund Research.
In the fourth quarter of 2008, investors pulled out a net US$150 billion, while many investors were unable to get out all their money because some funds had limited redemptions.
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</TD></TR></TBODY></TABLE>However, in the first quarter of this year the HFRX Global Hedge Index rose 0.68 per cent, outperforming equities and raising the prospect of stronger industry performance in 2009.
'Generally we seem to be at the point where if you've got a good strategy with good performance you have a much better chance now of seeing inflows,' Mr Maldonado said.
He said the most popular strategies with clients appear to be global macro, which bets on currencies, shares and bonds and which fell a better-than-average 4.62 per cent last year according to Credit Suisse/Tremont.
Also finding favour are market neutral strategies, which aim to have little or no exposure to overall market movements. -- Reuters
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