Hedge fund assets rise in May

Bloomberg

The industry had net inflows of $11.3 billion last month while performance-related gains amounted to $19 billion based on preliminary figures, the Singapore industry researcher said in a report on its Web site. The firm released a preliminary report last week on the May performance.

"Investors who missed out on the rally may be encouraged to put money back into hedge funds," said Winston Barnes, senior sales trader at WJB Capital Group in San Francisco. "When you have an up month, it’s human nature to buy and that helps hedge funds, but I’m still suspect if they will be able to weather another downside in the market."

Hedge-fund managers are outperforming global benchmarks after posting the worst year on record in 2008, helping attract capital from investors. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, gained 5.3 percent in May, its best performance since February 2000.

The index is up 9.4 percent this year to May, compared with a 4.2 percent advance for MSCI World Index of shares in 23 developed nations in the period.

Funds overseeing less than $100 million returned 5.8 percent, contributing the most to the gain in assets as well as performance, Eurekahedge said. That compared with a 3.2 percent advance by funds with more than $500 million under management.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether asset prices will rise or fall.