Money managers under the microscope
There is already hard data out from HFR showing hedge funds received net inflows of $1.1 bln in Q3 (small, but nevertheless a relief after $330 bln of net outflows in the year to June).
However, anecdotal evidence suggest it has picked up much more strongly in Q4, helped, no doubt, by gains of 17.53 pct so far this year, according to Credit Suisse/Tremont.
An interview with GlobeOp CEO Hans Hufschmid (incidentally a former LTCM partner) yesterday revealed gross and net inflows and outflows had all returned to pre-crisis average levels. (GlobeOp should know — it has $106 bln of client assets, mostly hedge funds, under administration).
Last year’s record poor year for the hedge fund industry was a boom period for managed futures.
May was a bumper month for the battered hedge fund industry with an impressive 5.23 percent return, the best monthly gain in almost a decade.
The data, from Hedge Fund Research, takes returns for the first five months of the year to 9.43 percent. After last year’s record losses, this is a much healthier figure and more reminiscent of the returns during the industry’s boom years such as 1999 or 2003.
Money managers were drawn by Madoff’s air of mystique, his stellar reputation as a market timer, the apparently steady returns with rock bottom volatility and the absence of fees, which some collected from clients anyway.
One thing that the credit crisis has demonstrated is that even performing well isn’t always enough to stop investors in need of cash from taking their money out of a hedge fund.