Nervous' investors give K2 a 400% inflow spike

Newly-listed hedge fund manager K2 Asset Management had its biggest month ever in net inflows in November, but it has little if nothing to do with the November 29 float on the Australian Stock Exchange, according to K2 founder and managing director Campbell Neal.

K2 took $57.62 million in inflows last month across its three funds, bringing total funds under management to around $738 million. The average monthly inflow was $12 million to $15 million until the November figure. Brand awareness was a key reason for K2 listing. However, Neal said the increase cannot be attributed to higher “;K2”; brand awareness – although he “;would have liked to think it was”;. Rather, he said, investors were likely to have been attracted to K2’s long/short investment strategy. Theoretically a long/short strategy is capable of making money when the markets are losing value. “;I think, if anything, people are feeling that the future is less certain – these inflows are probably the result of that uncertainty. People want to be able to run with the ups and the downs, not just the ups,”; he said. “;Brand awareness won’t pick up for a while yet.”; Just over $40 million of the $58 million inflow was from one of K2’s institutional clients, who Neal declined to name, and the remainder was from other smaller investors. K2 has an Asian ex-Japan equities fund, an Australian and New Zealand equities fund and an international equities fund. All three run long/short strategies. The K2 Select International Absolute Return Fund received the award for best long short & absolute return fund at the 2007 Australian Hedge Fund Awards in September. It returned 30.7 per cent net of fees for the 2007 financial year.