Investors favouring largest hedge funds proved right in April

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Investors continue to favour the hedge fund industry’s largest funds when it comes to committing new money, and in April that focus was right.

The Mizuho Eurekahedge Top 100 index of large funds, calibrated in US dollars, made 0.28% in April, and is up 1.87%. The broad Mizuho-Eurekahedge industry index is down 2.07% so far this year, buoyed only slightly by a 0.15% gain in April.

Overall hedge funds fell 0.29% last month, though beat the S&P 500 index of leading US shares, which dropped 0.63%, and global shares which fell 1.62%, according to data provider eVestment Alliance.

The data providers noted that early indications were investors pulled money from the industry on balance in April – for the second month running – but funds of more than $1bn assets were responsible for “virtually all reported inflows in April”, while mid-sized funds of $250m or more suffered almost all the redemptions.

Peter Laurelli, vice president of eVestment Alliance, said 54% of funds with over $1bn assets took in new money in April, versus only 49% of all reporting funds registering net new business, and only 45% of those funds with assets of between $250m and $1bn.

Investors overall seem comfortable with their hedge fund allocations, according to administrator GlobeOp Financial Services. In April funds GlobeOp administered to, representing about 10% of the $2trn industry, faced redemptions for 2% of their assets, the second lowest monthly reading of assets to be returned to investors since the index began one year ago.

It is far away from the high level of 19.3% of assets being called back by its investors in November 2008.

eVestment Alliance noted of April: “The story for 2012 continues to be that investors do not yet appear interested in increasing exposure to equity markets despite the early strong returns. Credit and macro/commodity funds continue to receive net inflows, but macro fund flows are dominated by the larger strategies which have generally performed better.”

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