BOSTON, June 10 The allure of hedge funds grew
in April when investors added $18.6 billion in new money to
these portfolios, according to a survey, even as their
performance again lagged behind stock and bond markets' returns.
Investors sent nearly twice as much cash into hedge funds in
April than in March when they added $10.6 billion, data from
industry groups TrimTabs/BarclayHedge show. Multi-strategy hedge
funds were the most popular, attracting $6 billion. Fixed income
funds took in $5 billion and event-driven funds that bet on
mergers, for example, saw $3.2 billion in inflows.
Fresh demand, fueled in part by rising equity markets which
have made wealthy hedge fund investors even richer and given
them fresh money to put to work, stands in stark contrast to
industry returns, however.
The average hedge fund earned 1.99 percent through May, less
than the 4.18 percent gain of the Barclays Capital
Government/Credit Bond Index and the S&P 500's 4.95 percent
gain. Hedge fund performance numbers are reported more quickly
than flow data.
"Hedge funds are supposedly sophisticated investments, and
people want to be with those kinds of managers," said David
Santschi, chief executive officer at TrimTabs Investment
Research, adding, "But hedge funds performance in the last years
suggests that they may not be so sophisticated at all."
In the first four months of 2014, hedge funds took in $56.4
billion in new money, more than three times the $16.9 billion
they took in during the same time in 2013. In April 2013, hedge
funds added only $429.9 million in new money.
(Reporting by Svea Herbst-Bayliss; Editing by Jonathan Oatis)