Report: Hedge Fund Investors Upbeat on Emerging Markets, Fixed-Income

(May 10, 2011) — The hedge fund industry has posted inflows of $15 billion in March, representing the seventh month in the past eight of positive returns, according to BarclayHedge and TrimTabs Investment Research.

“We expect recent strength to persist in light of a particularly kind landscape,” Sol Waksman, BarclayHedge’s president, says in a statement.

The research reveals that industry assets increased to $1.8 trillion by the end of March, the highest level since October 2008. Additionally, the report shows that hedge fund-of-funds obtained $3.4 billion, while emerging market funds attracted $3.4 billion, their eighth-straight month of inflows. The report finds that emerging markets and fixed-income strategies account for about half of all hedge fund inflows in 2011.

“The strength of flows into fixed-income is remarkable,” Vincent Deluard, Executive Vice President of Research at TrimTabs, notes in a statement. “Hedge funds investors and retail investors alike are keen on the space, while speculative traders and the Fed are buying Treasuries in size.”

Additionally, the report reveals that commodity trading advisors (CTAs) took in $6 billion (1.9% of assets) in March, drawing further attention to investors flocking toward commodities investments to guard themselves from inflation, while tapping into demand from developing countries and markets.

Calming worries over heightened interest rates following QE2, Deluard added: “Although many market participants expect interest rates to increase after QE2 closes at the end of June, prices have plenty of support at present.”