Investors continued to put money into hedge funds in the second quarter of the year, with a preference for funds with low exposure to global stock markets, new research shows.
Chicago-based Hedge Fund Research said that investors allocated $4.1 billion in net new capital to hedge funds in the three months to 30 June, taking the figure for the first half of 2012 to $20 billion.
The 2.7 per cent negative performance of the HFRI Fund Weighted Composite Index during the second quarter meant that total hedge fund capital dropped from record level in the previous quarter - from $2.13 trillion to $2.1 trillion.
The trend that has seen investors favor the largest players in the industry continued in the second quarter, as $11 billion was invested in firms with more than $5 billion in assets under management. By contrast, firms with less than $5 billion had net redemptions of around $6.9 billion.
HFR said that investors continued to prefer fixed income-based relative value arbitrage strategies, allocating nearly $10 billion to such strategies between 1 April and 30 June. The HFRI Relative Value Index gained 4.2 per cent in the first half of the year.
In other recent news from the hedge fund industry, earlier this week it emerged that the Dow Jones Credit Suisse Hedge Fund Index, which seeks to represent the entire hedge fund universe, dropped 0.40 per cent in June.