Hedge funds see $150 billion flow in through Sept.

AP News
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Posted: Dec 14, 2009 4:58 PM

Hedge funds saw more than $150 billion flow in from investors during the year's first nine months, with clients increasingly demanding funds provide more information about their investments, Barclays Capital said Monday.

"Managers can no longer let returns sell themselves," said the report's author, Andrea Gentilini. "Today's investors want more communication, more due diligence and more transparency."

Barclays' Prime Services division conducted the research by interviewing managers of a total $387 billion in hedge fund assets, or about one-third of the total in the largely unregulated industry.

Mid-sized funds with $5 billion to $10 billion under management were the only group to see investors put substantially more money in than they took out through September. Those funds saw a 5 percent positive net flow.

Hedge funds with more than $10 billion have been fairly stable, with relatively little flowing in or out. Smaller funds of less than $1 billion have seen a net outflow of 16 percent, while funds with $1 billion to $5 billion saw a net 12 percent flow out.

Many hedge fund managers reported they were expanding their marketing and investor relations teams and increasing communications with investors.

Managers surveyed for the study reported their assets under management had fallen by an average 32 percent from peak levels.

Hedge funds as well as regulated mutual funds have seen managed assets drop since stock prices peaked in late 2007. However, sharp declines in 2008's market plunge have been partly offset by a rally that started in March.