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Hedge Fund Inflows Help Big Get Even Bigger

Investors continued to add new capital to hedge funds in the second quarter of 2010, with net inflows totaling $9.5 billion, according to new data from Hedge Fund Research (HFR), a provider of hedge fund industry data.

The data, however, shows nearly all of the new capital went to the largest funds, those with more than $5 billion under management.

In this environment, allocators are not inclined to stray from the most established (firms),” Kenneth Heinz, president of HFR, told CNBC Tuesday.

The new capital from Q2 brings the year-to-date total to $23.3 billion and marks the fourth consecutive quarter of inflows to the industry. The numbers, however, are still far behind pre-recession levels.

“If you were to compare the first half of 2010 to the first half of 2007, prior to the financial crisis, you’re looking at inflow numbers only about 20 percent of the levels you were seeing in 2007,” Heinz explained.

Total hedge fund industry capital ended the most recent quarter at $1.65 trillion, according to HFR, down from $1.67 trillion the prior quarter.