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Alternative Market Briefing

eVestment: equity flows push hedge fund assets to 5-year high

Thursday, December 19, 2013

Bailey McCann, Opalesque New York:

Investor flows into hedge funds were positive for a fifth consecutive month, according to the latest data from eVestment. New allocations of $15.3bn brought industry assets to a five-year high of $2.84tn and trail their pre-financial crisis peak by just over 3%. Through 2013, eVestment estimates total industry assets are on pace to increase by $256bn, an amount nearly 80% greater than 2012’s $144bn increase.

Equity strategies took in the majority of new assets in November with $10.5bn in allocations. Inflows to long/short equity funds in November were the largest in more than 50 months, since August 2009. Historically, in the months 38 from May 2010 to June 2013, investor flows to equity outpaced credit only four times. In the five months since the end-of-taper alarm and ensuing US treasury rate spike, monthly equity flows have outpaced credit three times. Credit assets rose in November, making up October's outflows, but the overall pace of allocations into credit is notably slower.

Investors allocated $3.5bn into credit during November, meaningfully below their prior 12-month average inflow of $7.1bn.

Despite a recent preference for equities, there are some nuances. There has been a noticeable decline of allocations to traditional long-only equity products across both developed and emerging market exposures in Q3. On the hedge fund side, investors are showing more interest in both developed and emerging markets beginning i......................

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