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Alternative Market Briefing

Investor interest in hedge funds surges to pre-financial crisis highs - eVestment

Thursday, March 20, 2014

Bailey McCann, Opalesque New York:

The latest investor asset flow data from eVestment shows that investors are piling into hedge funds like it's 2006. Investors allocated an estimated $41bn in February; the largest monthly allocation since eVestment began tracking monthly flows in October 2008. Total industry AUM of $2.93tn sits only $12bn below its all-time high set in Q2 2008.

Performance gains added an additional $45.9bn, bringing February’s asset increase to $86.9bn, an increase of 3.1%. This is the industry’s largest asset growth since performance gains drove a large increase in May 2009.

In terms of specific strategies, investor preferences for equity over credit persisted for its fourth consecutive month, the longest such streak since investors chased the equity market recovery in the months following the financial crisis. Despite being overshadowed by equity flows, credit strategies showed a significant rebound of investor sentiment in February, more than offsetting the flare of redemptions following the sharp uptick of interest rates in May 2013.

Event driven funds continued to receive large allocations, led by activist strategies that received an estimated $2.1bn in new capital, or roughly 41% of event driven net inflows during the month. Total AUM in funds employing activist strategies reporting to eVestment reached nearly $73bn in February.

Report data shows that investors dipped back into macro strategies in February, with positive flows t......................

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