Research house Lonsec has given its highest rating to five products following its review of single strategy, multi-asset and multi-manager alternatives funds.
The funds Fauchier Partners Absolute Return, BlackRock Scientific Global Markets, Winton Global Alpha, Aspect Diversified Futures and Man AHL Alpha earned Lonsec's highly recommended rating.
Lonsec senior investment analyst Deanne Fuller said the products had been given the top rating due to factors including strong investment teams, sound research departments and good track records.
"We reviewed over 40 managers in the lead up to the 2011 review, conducting on-site due diligence on managers located across the major hedge fund centres of Zurich, London, New York, Princeton, Greenwich and San Francisco, as well as Melbourne and Sydney," she said.
"As well as meeting with incumbent managers, it's important for us to meet with 'prospect managers' and identify any potential managers that would enhance Lonsec's recommended list.
"Not all managers we meet with are rated."
Lonsec's review also found that after the significant outflows experienced by the hedge fund industry during the global financial crisis (GFC), assets under management in the sector during fiscal 2011 returned close to 2007 levels.
Total hedge fund assets were estimated at US$1.77 trillion ($1.76 trillion) as at March, Lonsec said, citing data from BarclayHedge.
"The managed futures, global macro and event driven sectors received the largest inflows," Fuller said.
"As many investors still have the effects of the GFC fresh in their mind, larger funds with longer track records attracted the majority of inflows due to their lower perceived risk."
"Most flows came from pension funds and institutional investors driven by a desire to find attractive risk adjusted returns uncorrelated to the stock and bond markets."
