Institutional investors remained frozen from the end of 2008 through the first three quarters of last year. There was very little hedge fund activity. But investment began to ramp up again in the fourth quarter. And the partial 2010 first-quarter data show that the investment trend remains strong. I think there is going to be an absolute tsunami of institutional money going into hedge funds. Many investors and their consultants and advisers now consider hedge funds the preferred alpha delivery system.
—Stephen Nesbitt, CEO Cliffwater, an alternative investment consultant, speculating on resurgent demand by institutions for hedge fund products. HF inflows totaled $21.5b in 2009, which was down 40% from 2008, 68% from 2007, and 10% from 2004’s previous low of $23.8b. Figures through March 19th suggest $12.3b in inflows, and some argue that 2010 will see $49b in net inflows. Though smaller than 2007’s banner year of $66.1, it would be the second-best year for fundraising, according to Pensions & Investments data: via P&I Online.