Hedge funds raked in more money in August, outperforming the markets and the volume of inflows versus redemptions. It was the seventh month this year when investment in hedge funds exceeded redemptions, according BarclayHedge and TrimTabs Investment Research.
According to BarclayHedge President Sol Waksman, ”Recent inflows might owe in part to excellent relative performance.” He said, “While the S&P 500 plunged 10.6 percent in the four months ended August, the Barclay Hedge Fund Index decreased only 5.6 percent.”
Also, many investors are attracted to hedge funds right now, especially those that offer fixed income like those focused on bonds and treasuries. This subset took in $14.6 billion so far this year. This type of fund is also amongst the best performing type of fund, returning 3.6%.
However, there is a downside to such heavy volatility – several hedge funds have lost big, reporting major losses in September as well as year-to-date (see which hedge funds lost). For instance, John Paulson is down 46.73% this year on one of his funds, the Advantage Plus, after losing 19.35% in September.