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10:04 AM
Phil Albinus
Phil Albinus
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Are Hedge Funds Now Safe Harbors?

With market volatility thanks to a full-blown crisis in Europe, you'd think that investors would be running away from hedge funds. Think again.

According to measurements from GlobeOp, the hedge fund administration and technology provider, hedge fund membership has reached pre-crisis levels despite some iffy returns.

According to Reuters:

The GlobeOp Capital Movement Index, which tracks monthly net subscriptions to and redemptions from hedge funds managing around $170 billion (109 billion pounds) of assets, advanced 1.55 points to 141.01 points this month, topping the 140-point mark for the first time since October 2008, when Lehman's demise sent markets across the world into a tailspin.

Investors appear to be bailing on equities for almost any other investment class to avoid the recent market volatility that took off this summer. This has caused some head-scratching moves. For example, after Standards & Poors downgraded the United States credit rating earlier this year, investors flocked to US bonds the next day following bad news from across the Atlantic. Further, as the Euro has seen a slow-motion meltdown, investors are still looking to foreign exchange for returns.

GlobeOp Chief Executive Hans Hufschmid told Reuters "If you had presented me with the euro zone scenario in the spring, I would have expected outflows from hedge funds." He continues, "We have not really seen that all year. The euro zone has not really impacted the flows."

According to the news report, "hedge funds saw a net inflow of money last month, with gross inflows rising to 3.41 percent, up from a rise of 2.84 percent a month earlier."

Once again, there seems to be opportunity in a crisis and few investors are willing to sit on their money to avoid the risk.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
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