Hedge Fund Inflows Expected to Exceed Outflows for 2010

March 15th, 2010
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For the first time since 2007, investors are expecting to put more money in hedge funds than they withdraw, according to the results of a Deutsche Bank AG survey examined by the Wall Street Journal. Those who participated in the survey estimate that inflows will total in excess of $100 billion of net assets for 2010. Investors withdrew more than they invested in both 2008 and 2009.

Although investors are showing cautious optimism, most respondents believe around 20% of hedge funds will close their doors in 2010. Hedge funds as a whole posted 20% gains in 2009, but 2008 proved to be a disaster as hedge funds suffered the poorest annual returns ever recorded.

The survey also revealed that the use of leverage has increased since 2009 (to an average of $2.20 for every dollar invested) but is still below the 2008 peak of $3.75 per dollar invested.
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