Hedge funds pulled in $7.1 billion in new money in January, according to data released on Monday that pointed to fresh demand for the loosely regulated portfolios as investors search for better returns.
January's inflows reversed the $4.07 billion that pension funds, endowments and wealthy individuals took out of hedge funds in December.
"The inflow in January is a very positive sign for the hedge fund industry," said Sol Waksman, CEO of BarclayHedge, the tracking company that compiled the data. "The first month of the year typically delivers a redemption-driven outflow."
After a rough period when investors punished managers for poor returns by pulling out about $1 trillion between June 2008 and July 2009, investors are slowly returning to alternative assets. Indeed, many large investors said they expect to put more money with hedge funds later this year.
Hedge funds now manage roughly $1.5 trillion in assets, BarclayHedge said. This is below the industry's highpoint of roughly $2 trillion at the end of 2007 but 24 percent above its low point in April 2009.
In January, investors poured the bulk of new money into funds that bet on distressed securities, BarclayHedge found.
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