Hedge funds rack up record year

Despite a troubled economy, the hedge fund industry attracted a record $194.5 billion in new investor capital in 2007. That brought the total assets under management to $1.87 trillion, according to data from Hedge Fund Research Inc. The Chicago-based hedge fund industry tracker said inflows for 2006 totaled $126.5 billion, representing a 54% jump from the previous year. However, inflows slowed to $30.4 billion in the fourth quarter, well below the previous three quarters. The Relative Value Arbitrage and Equity Hedge strategies were the most successful in attracting new assets in 2007, bringing in $45.9 billion and $41.5 billion, respectively. For all of 2007, the Hedge Fund Research Fund Weighted Composite Index rose 10.24%. HFR's index of Emerging Market strategies led all gainers, posting a 25.03% increase for the year.