Hedge funds attracting significant capital from institutional investors in 2011

Hedge funds have been attracting significant capital from institutional investors in 2011, with current funding levels on track to make this the second-best year since 2004.

Institutional investors have been allocating massive amounts of money to hedge funds, with $39.9 billion in net inflows and pending searches happening from the beginning of the year through November 10, according to Pensions and Investments.

The media outlet reports that if the current rate of investment is maintained for the rest of the year – as many market experts predict – 2011 will be the biggest year for inflows into hedge funds since 2007, and the second largest since 2004.

Data provided by the media outlet indicates that a total of $17.4 billion in institutional investor capital was allocated to hedge funds in the first quarter, $5 billion in the second quarter, $8.3 billion during the third quarter and $9.2 billion in the fourth quarter through November 10.

The Wall Street Journal reports its opinion that investors may be looking to hedge funds as they have recorded a loss of 5.4 percent during the first three quarters as opposed to the Standard & Poor’s loss of almost 10 percent.

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