Hedge funds look set for strong 2011

Mar 16, 2011 by Charles Gubert

Hedge funds gained nearly $30 billion through net inflows in the first two months of 2011 with assets under management hitting $1.7 trillion for the first time since September 2008, according to Eurekahedge.

Assuming the hedge fund industry grows by at least 10% through performance and a further $130 billion in net inflows, the industry could surpass the $2 trillion mark by the end of 2011.

These are the latest figures illustrating the industry is fast recovering from its lull. According to Hedge Fund Research (HFR), assets grew to $1.91 trillion in 2010. This is fast approaching the all-time asset level peak of $1.93 trillion which was set in the second quarter of 2008, added HFR.

This data is conservative in comparison to the numbers released by Deutsche Bank last week following its annual investor survey. It revealed that global hedge fund assets could reach up to $2.25 trillion by the end of the year through increasing capital inflows and performance gains. Anita Nimes, Deutsche Bank’s global head of capital introductions, said 2011 would be a more favourable year for the sector.

However, Deutsche Bank’s confidence on the state of the hedge fund industry has been queried by some experts. Dr Andre Sterne, founder and principal of absolute return investment management company Oxford Asset Management, said he was not optimistic and doubted Deutsche Bank’s growth expectations.

These views were shared by Mark Harrison, managing director and head of European prime brokerage at Citi. He warned that Deutsche Bank’s estimates appeared to be very optimistic unless there was a significant demand from investors for alternative strategies.


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