Funds of hedge funds have had a tough time recently.

Losses of 21.37 percent last year helped persuade clients to withdraw a net $50 bln in the fourth quarter and a further $85 billion in the first quarter of this year, according to HFR.

Funds of funds weren’t helped either by the speed with which private clients — who often hold these portfolios rather than the underlying fund – pulled out of the asset class.

But perhaps the hammer blow was Madoff — ironically not a hedge fund but nevertheless not spotted by some of the big funds of hedge fund firms, including RMF and UBP.

However, according to S&P Fund Services’ Randal Goldsmith, funds of hedge funds are once again seeing net client inflows, helped by this year’s pick-up in performance.

And he reckons GAM, Julius Baer’s troubled hedge fund unit, is also probably seeing net new money too after a period of redemptions.

It all adds to the growing impression that, while still a long, long way from its heyday, hedge fund land is ever so slowly starting to see an improvement in its fortunes.

(See also Polar sees thaw and Time to crack open the champagne?)