Hedge funds rake in big bucks
Hedge funds gained $42 billion in new money in the second quarter, their biggest quarterly gain in three years.
By Amanda Cantrell, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Hedge funds attracted $42 billion of new money in the second quarter, the largest quarterly spike in new assets since 2003, according to an industry tracker.

That brings the total assets invested in hedge funds up to $1.225 trillion, according to Chicago-based hedge fund tracker Hedge Fund Research, which conducted the survey of asset flows.

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Hedge funds are private investment partnerships limited to institutional investors and wealthy individuals. Hedge funds use a variety of strategies, from betting on or against stocks, currencies or commodities to more esoteric strategies involving "derivative" investments or turning around distressed companies.

While hedge fund performance this year has been disappointing to some, the funds have outperformed many major market indices. For the year, hedge funds have posted gains of 6.16, according to the HFRI Composite Index. Hedge fund performance can be difficult to track, because the funds are private and are not required to report their performance. Thus, different hedge fund indexes will report different results.

By contrast, the S&P 500 is up 0.92 percent for the year to date, while the MSCI World Index is up 2.17 percent.

Equity hedge funds gained the most assets, garnering $13 billion in new investments in the second quarter, according to HFR. Global macro funds, which invest in currencies and other instruments in markets around the world, gained $8.4 billion in new money. Fixed income arbitrage funds posted the biggest outflows, losing $164 million in the quarter.

For the quarter, hedge funds are flat, according to the HFRI Index. The top performing hedge fund category for the quarter was short selling, with an average return of 4.17 percent, reflecting the tough market environment during the quarter. Short selling funds are up 2.30 percent for the year, according to HFR.

Equity non-hedge performed worst, posting a 2.94 percent decline for the quarter, according to HFR. The strategy is up 5.07 percent for the year.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.