Hedge funds took in $8.3 billion in new money last month, according to preliminary data from BarclayHedge that suggests the industry is recovering after investors pulled out record amounts of cash last year.
Investors added the money in August after they pulled out $20 billion in July, BarclayHedge, which tracks flows in the $1.4 trillion hedge fund industry, told Reuters on Tuesday.
Since hedge funds are not required to report returns or asset flows, these types of reports are closely watched to gauge the industry's health less than one year after investors removed a record $152 billion in the fourth quarter.
Because hedge fund returns have improved markedly this year from last year's worst-ever losses -- the average fund climbed 17.3 percent through August -- industry analysts expect investors slowly to put new money to work in these funds.
By the end of the year, we expect flows to stabilize and probably be up slightly, said Vincent Deluard, an analyst at TrimTabs which compiles the BarclayHedge flow data.
This would be a turnaround from last year when investors fled these loosely regulated portfolios at a record pace. The demand to get out was so enormous that many managers restricted clients' departures, effectively pushing last year's redemptions into this year.
Many funds allow investors to exit only at the end of the quarter or at the end of the half.
(Reporting by Svea Herbst-Bayliss, editing by Matthew Lewis)