Hedge Fund Focus

HFN Releases Hedge Fund Administrator Survey, February Asset Flow and Performance Estimates Investor Redemptions Slow Amid Near Record Outperformance of Equities

NEW YORK–(BUSINESS WIRE)–HedgeFund.net (HFN) has published its semi-annual survey of hedge fund administrators, the Q4 2008 HFN Hedge Fund Administrator Survey, sponsored by Advent: http://www.hedgefund.net/reports/Admin_Survey/q408_survey.htm

The Q4 2008 HFN Administrator Survey contains information on hedge fund and fund of funds assets under administration (AuA) from 60 administrators. Results detail total reported AuA, regional concentration, growth rates and top ten lists for more than 20 criteria. Survey results show the Top 10 administrators reported $1.64 trillion in hedge fund AuA with Citco Fund Services, State Street Alternative Investment Solutions and Goldman Sachs Administration Services taking the top three positions.

The administrator survey is the basis for HFN’s hedge fund industry asset estimate. To read how HFN uses the administrator survey to estimate total single manager hedge fund assets, view this survey link: http://www.hedgefund.net/reports/Admin_Survey/q408_surveyOtherTables.htm

February Hedge Fund Asset Flows:

HFN has released early estimates for February hedge fund asset flows which indicate the outflow from the industry continued during the month, but at a much slower rate than prior months. Early estimates show hedge fund assets fell an additional 2.2% in February 2009 to $1.746 trillion compared to a reduction of 7.6% in January 09.

The drop was largely due to net investor redemptions and fund liquidations of $35.9 billion during the month and combined with a reduction due to performance losses of $3.53 billion. Detailed asset flow results across over 60 regional, asset class and strategy classifications will be available at the end of Q1 in the HFN Asset Flow/Performance Report.

Last five months estimated hedge fund industry asset flow table.

Date         Total
Assets         Total
Flows         $ Change
for Past 12
Months         Quarterly %
Change         Change Due
to
Performance         Net flows from
Redemptions/Allocations
and Launches/Liquidations
10/2008         $2,269.59         ($246.73)         ($591.83)         -9.81%         ($141.53)         ($105.20)
11/2008         $2,118.65         ($150.93)         ($707.11)         -6.65%         ($29.08)         ($121.86)
12/2008         $1,932.24         ($202.23)         ($1,116.42)         -8.80%         ($2.53)         ($199.70)
01/2009         $1,786.26         ($145.98)         ($745.88)         -7.56%         $19.26         ($165.24)
02/2009         $1,746.83         ($39.43)         ($538.58)         -2.21%         ($3.53)         ($35.90)
All figures are single manager hedge fund assets only.

Hedge Fund Performance:

Early estimates have the HFN Hedge Fund Aggregate Average -0.61% for February, but this figure will likely go lower as more funds report.

•    Taking into account internal estimates of where month end performance will likely settle, February 2009 should go down as the 5th highest level of hedge fund outperformance over equity markets in the last twenty years.

•    In the first two months of 2009, hedge funds will likely have outperformed the S&P 500 Total Return Index by over 17 percentage points, (-0.61% vs. -18.2%). This is the second greatest consecutive combined monthly outperformance over equity markets in the last thirty years behind October and November of 1987, a year in which hedge funds outperformed the S&P by nearly 24 percentage points.

•    In the last twenty years hedge funds have outperformed the S&P 500 Total Return Index by greater than 8 percentage points in any one month only seven times. Three of these have occurred in the past five months; October 2008 and then in both January and February 2009. In the six months span ending February 2009 hedge funds will likely have outperformed the S&P by a cumulative total of 42%.

Positive benchmark performance for February includes:

Benchmark         February         YTD 2009

HFN Options Strategies Average         3.33%         5.24%
HFN Short Bias Average         3.16%         6.58%
HFN Convertible Arbitrage Average         1.70%         6.31%
HFN Asset Based Lending Average         0.73%         1.74%
HFN Merger/Risk Arbitrage Average         0.56%         1.04%
HFN Value Average         0.20%         -0.43%
HFN Fixed Income non-Arbitrage Average         0.05%         1.30%

Negative benchmark performance for February includes:

Benchmark         February         YTD 2009
HFN Long Only Average         -3.04%         -6.23%
HFN Healthcare Sector Average         -2.37%         -1.31%
HFN Emerging Markets Average         -1.48%         -3.78%
HFN Long/Short Equity Average         -1.12%         -1.42%
HFN Small/Micro Cap Average         -0.95%         -2.33%
HFN Market Neutral Equity Average         -0.49%         0.49%
HFN CTA/Managed Futures Average         -0.43%         -1.20%
HFN Event Driven Average         -0.40%         1.18%
HFN Fixed Income Arbitrage Average         -0.26%         0.82%
HFN Distressed Average         -0.22%         0.22%
HFN Multi-Strategy Average         -0.18%         -0.74%
HFN Macro Average         -0.17%         0.17%

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS

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