MONACO Fund of hedge fund firm Liongate Capital Management has seen $300 million (180 million pounds) of net inflows over the past six weeks as it benefits from rivals' difficulties, co-founder Randall Dillard said.
Dillard, whose firm runs several billion dollars in assets, said on Wednesday he believes the industry has reached a "tipping point" after suffering huge outflows since the start of the credit crisis.
Two-thirds of the firm's new inflows have gone into managed accounts, after a tough fourth quarter of 2008 for the industry when Liongate saw 14 percent of its assets withdrawn.
Managed accounts have grown in popularity in recent months in the wake of the Madoff scandal, in the belief these segregated pools of assets give investors more transparency and allow them to withdraw their money more easily.
"Institutions have come to us. Others (funds of funds) were compromised and they (the institutions) have been giving us all their allocations," Dillard told Reuters on the sidelines of the GAIM 2009 conference.
"It's where the tipping point is. I think generally (in the industry) it's going to pick up. It's not unusual after a crisis of that magnitude that people sit and see if markets stabilise, and after March markets have stabilised."
The fund of funds industry in particular has suffered reputational damage after the fraud by the U.S. financier, in which several leading fund selectors were invested.
Dillard said Liongate saw $800 million of net inflows overall last year, despite withdrawals in the fourth quarter, and had seen a fairly flat start to 2009.
His comments come after a tough period for the industry as investors, concerned after record poor performance last year and needing to access cash as world markets fell, pulled $250 billion out of hedge funds between October and March, according to Hedge Fund Research.
Dillard also said the firm will open an office in Switzerland, which will provide access to Swiss-based hedge funds and research, and also in Mexico City, adding: "There's too much concentrated in London."
(Editing by Elaine Hardcastle and Jon Loades-Carter)