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Alternative Market Briefing

Hedge fund inflows edge slightly higher in 2012 despite end of year redemptions

Friday, January 18, 2013

Bailey McCann, Opalesque New York: Inflows to hedge funds ended 2012 slightly higher than 2011, despite redemptions in December according to new data from eVestment. The industry finished 2012 with assets increasing 5.9% from year end 2011. Credit and macro funds were favored throughout the year over other strategies, seeing the greatest inflows and better returns. Notably, the persistent month to month outflows from emerging markets appears to have abated. Net flows remain negative, but investor sentiment appears to be shifting.

In total, the hedge fund industry ended 2012 with $2.601tn in assets under management, an increase of 0.5%. This number represents the peak for 2012, but is still 13% lower than assets under management in 2008. Investors withdrew an estimated $9.5bn in December resulting in negative net investor flow in Q4 of $10.3bn.

For 2012, investors added $29.2bn to their hedge fund investments versus the $26.5bn added in 2011. The industry had core growth of 1.2% for 2012 - a slight increase over the 1.1% core growth in 2011. These numbers are significantly lower relative to the years immediately following 2008. 2009 and 2010 saw core growth of 5.1% and 3.7% respectively.

Credit surpassed other investment strategies in October 2012 and maintained that advantage through the end of the year - a trend which is continuing in early 2013. According to Peter Laurelli, VP and Head o......................

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