March Gains End Flat Quarter for Hedge Funds -- Page 2
Investors grow hungrier for risk, but hedge funds sit tight.
Fund Times
Convertible bonds rallied in March, as the extremely wide spreads caused by a forced sell-off late last year made these bonds cheap for investors to purchase. The Morningstar Convertible Arbitrage Hedge Fund Index rose 3.9% in March and 7.0% over the quarter, making it the best-performing hedge fund category index. Convertible arbitrage and short equity hedge funds in Morningstar's database were the only categories to receive inflows in March--these funds saw inflows of $45 million and $42 million, respectively. In aggregate, hedge funds in the database, excluding hedge funds of funds, experienced net outflows of $4.2 billion in February and $31.1 billion year to date.
The Morningstar Corporate Actions Hedge Fund Index, which includes funds that attempt to profit from mergers and acquisitions, IPOs, spin-offs, and capital restructuring, increased 2.2% in March and 3.4% for the quarter. Mergers and acquisitions in the first quarter fell to levels not seen since 2004, according to Dealogic, but deals from bankruptcies jumped in March, especially in the United States and Japan. Deal volume from private-equity leveraged buyouts hit its lowest point since 1996. Global IPOs also fell by almost half in the first quarter compared with the first quarter of 2008.
Global trend-following hedge funds, which profit from sustained upward or downward price trends in financial and commodity futures, saw a difficult month, as many contracts--most notably oil and gold--whipsawed during March. The Morningstar Global Trends Hedge Fund Index dropped 2.0% in March and 4.1% over the quarter. On the bright side, fund managers in the Morningstar Global Non-Trend Index, who tactically bet on fundamental macro-economic moves in the market, benefited from a rally in government bonds and stocks after the Federal Reserve and Bank of England implemented quantitative easing. This index rose 0.5% in March, but declined 0.1% over the quarter.
<< Previous Page | 1 2
| Estimated Net Flow Data for December and Full Year 2008 | ||||
 | | | | |
| By Category | Feb. 2009 Flows | YTD Flows | ||
| ||||
| Convertible Arbitrage | 45 | -315 | ||
| ||||
| Corporate Actions | -277 | -1,003 | ||
| ||||
| Debt Arbitrage | -119 | -773 | ||
| ||||
| Distressed Securities | -192 | -615 | ||
| ||||
| Dvlp Asia Equity | -168 | -4,167 | ||
| ||||
| Emerging Markets Equity | -418 | -2,043 | ||
| ||||
| Equity Arbitrage | -277 | -1,415 | ||
| ||||
| Europe Equity | -357 | -2,024 | ||
| ||||
| Global Debt | -218 | -262 | ||
| ||||
| Global Equity | -862 | -3,860 | ||
| ||||
| Global Non Trend | -391 | -1,665 | ||
| ||||
| Global Trend | -437 | -2,730 | ||
| ||||
| Multistrategy | -331 | -5,579 | ||
| ||||
| Short Equity | 42 | 23 | ||
| ||||
| US Equity | -203 | -4,347 | ||
| ||||
| US Small Cap Eqty | -62 | -319 | ||
| ||||
| Estimated Total Net Flow | -4,225 | -31,093 | ||
|
| ||||
| By Rating (includes Fund of Funds) | ||||
| ||||
| 5-Star | -779 | -6,168 | ||
| ||||
| 4-Star | -1,804 | -8,510 | ||
| ||||
| 3-Star | -1,080 | -7,060 | ||
| ||||
| 2-Star | -430 | -5,225 | ||
| ||||
| 1-Star | -214 | -655 | ||
| ||||
| Not Rated | -70 | -5,127 | ||
| ||||
| Estimated Total Net Flow | -4,377 | -32,745 | ||
 | ||||
| December asset flows for the Morningstar Hedge Fund Indexes are based on funds that reported as of April 15, 2009. |