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Hedge Funds Took in $16 Billion in October, Most in a Year

Hedge funds received net deposits in October of $16 billion, the largest since November 2009, as investors were willing to take more risk, according to TrimTabs Investment Research and BarclayHedge Ltd.

Distressed securities funds took in the most cash, receiving $3.8 billion in October, the research firms said today in a report. Fixed-income funds received the least of any strategy, taking in $506 million, the smallest amount since April.

“Hedge fund investors are exhibiting a healthier appetite for risk,” Sol Waksman, president of Fairfield, Iowa-based BarclayHedge, said in the report. “They are finally venturing into areas like distressed securities after embracing conservative strategies for most of the year.”

Hedge funds, with worldwide assets of $1.6 trillion, gained an average of 2 percent in October, according to the report. The Standard & Poor’s 500 Index of large U.S. stocks returned 3.8 percent in October including dividends.

“Flows are doubtless following performance,” Waksman said. “Preliminary data show that hedge funds are outperforming the S&P 500 by about 21 basis points through November.”

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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