After a year that included painful losses, blocked redemptions and widespread closures, hedge funds may be bottoming out. In May, hedge funds soaked up net cash inflows for the first time in 10 months, data tracker Eurekahedge said. May also delivered the best hedge fund performance in years, according to various sources, and the pace at which funds are closing up has slowed.
The improvements come amid a continued rally for the stock market, a jump in oil prices and indications the economy is poised to recover. Hedge funds’ glory days seem to be over: With about $1.3 trillion in assets under management, the industry has contracted from nearly $2 trillion a year ago, according to Hedge Fund Research Inc. Yet the 376 funds that closed in the three months ending in March amounted to half the number closed in the fourth quarter of 2008, HFR said.