Last September, we were the first to report that Managed Futures had skyrocketed to the #1 hedge fund strategy in terms of assets under management (blog post), according to data collected by Barclay Hedge, with $223 Billion in total assets vs the massive $1.7 Trillion Hedge Fund industry.  As we fast forward to the end of 2010 where assets swelled in hedge funds to a grand total of $1.96 Billion (aprox 15% increase) we’ll note again that Managed Futures has retained its #1 raking with total assets under management of $266.8 Billion = a 19.4% increase.

Hold on just a minute…When looking at data, such as the above, it is always important to dig a little deeper. One question that came to mind was how much of that money can be attributed to investment gains and losses vs new money. A quick glance at the Barclay Hedge CTA Index returns shows that the entire index was ahead just over 7% during the 6-month period from July – December. Compare this figure to the Barclay Hedge Fund Index, which increased just over 10% during the same period, and we can rationalize that Managed Futures #1 ranking is likely attributed to new money entering the market looking for the potential benefits of Managed Futures in their portfolios. Read our recent newsletter Rethinking the Efficient Frontier for more information on the diversification advantages of Managed Futures