The size of the hedge fund industry reached $1.8 trillion in total assets in the end of  March, a gain of $2.3 billion in that month when compared with February, according to BarclayHedge and TrimTabs Investment Research.

These findings contrast with numbers from Chicago-based Hedge Fund Research, which said the sector holds a total of $2.13 trillion in assets (which may be accounted for by a different universe of funds tracked by this organisation).

The BarclayHedge and TrimTabs figures are based on data from 3,034 funds.

In the first quarter of 2012, there were industry outflows of $3.2 billion. In the same period, fund returns were 5.61 per cent, lagging the S&P 500 index rise of 12 per cent. 

“Though asset growth rebounded in the summer of 2009, it petered out in May of 2010 and has been sliding ever since, even as equity market asset prices remained resilient and surged strongly in Q1 2012,” said Sol Waksman, founder and president of BarclayHedge.

Two hedge fund investment strategies are attracting more investors, the firm said.  “Macro and fixed income hedge funds are the only strategies that have seen sizeable inflows as a percentage of assets over the past three years,” said Leon Mirochnik, an analyst at TrimTabs. “Hedge fund investors see these strategies as offering the best defence against unpredictable geopolitical issues and global expansionary monetary policies,” he said.

Hedge funds based in Japan have been popular in the past year, generating an inflow of 15.4 per cent of assets despite losing 4.3 per cent.

“Apparently investors were betting they could capitalise on an appreciating yen over the past 12 months, but the yen lost 0.9 per cent against the US dollar in that time period,” Mirochnik said.

The April 2012 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found that nearly half the hedge fund managers surveyed believe that sometime this year the S&P 500 will trade below 1,257, where the index stood at the end of 2011.