Hedge funds took in nearly $11 billion in January

BOSTON Tue Mar 1, 2011 3:29pm EST

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BOSTON (Reuters) - Investors poured nearly $11 billion into hedge funds in January, according to a new report which suggests that investors are ready to take fresh risks on these loosely regulated portfolios.

Total hedge fund assets stood at $2.5 trillion at the end of January, marking a $17.7 billion in increase from the end of December, HedgeFund.net said on Tuesday.

"Performance accounted for a small part of the increase and net investor flows were positive and significantly above January 2010," the group wrote in its monthly report.

The group said performance accounted for a $6.8 billion gain while net inflows accounted for $10.9 billion.

Hedge funds are not required to report returns or how much money they manage. Therefore investors pay close attention to reports from groups like HedgeFund.net for hints on what type of trends are developing in the industry.

Later this week, other research firms including Hennessee Group, are expected to report how hedge funds fared in February. In January, the average fund inched modestly higher with a 0.8 percent gain but trailed the broader Standard & Poor's 500 Index 2.26 percent gain.

Despite the pickup in flows, HedgeFund.net reported that the industry has still not recovered fully from the 2008 financial crisis when the average fund lost about 19 percent.

"Total hedge fund AUM remain 18 percent below their all-time high set in Q2 2008," HedgeFund.net said.

(Reporting by Svea Herbst-Bayliss, editing by Dave Zimmerman)

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