Money managers under the microscope
GLG Partners has confirmed positive client money flows are back on the agenda, reporting net sales of $2.2 billion in the second quarter in a trading statement which sparked a rise in the share price. The company also reckons strong performance among its funds has set the scene for more to come.
Barclays Capital last month predicted net inflows could reach as much as $50 billion in 2009, and GLG shows the numbers are starting to come through to support that theory. Of about 300 investors, BarCap found that some 80 percent were expecting to move back out of cash and into hedge funds this year.
The argument goes that investors burned by 2008 will get greedy again, and aggressively seek out the quickest route they can see to recoup the losses. If that theory proves true then perhaps investors were not as spooked as some have thought by the imposition of gates to redemptions when the crisis was at its height.
Longer term, it will be interesting to see if flows can recover enough to send total assets back to pre-crisis levels, because the revived love affair with hedgies is hugely vulnerable to fresh market wobbles, and is not universal. Trustees of the $40 billion Massachusetts’ state pension fund on Wednesday voted to scrap its portable alpha strategy and slash absolute return fund allocations by a quarter.