Opalesque Industry Update – Industry completes recovery from record performance drawdown;|
HFRI Fund Weighted Composite Index surpasses October 2007 peak
Hedge funds recorded the largest quarterly asset jump in over three years, with total industry capital increasing by $120 billion in 3Q10 according to data released today by Hedge Fund Research, Inc. (HFR), the leading provider of hedge fund industry data. The capital increase reflects a combination of both performance-based gains and new capital inflows, bringing total assets invested in the hedge fund industry to $1.77 trillion as of 3Q10.
The HFRI Fund Weighted Composite Index posted a gain of +5.17 percent in the third quarter, bringing the cumulative Net Asset Value (NAV) of the broad-based index to exceed the previous record level set in October 2007. After three years, the industry has emerged from the worst cumulative performance drawdown in its history, which had exceeded -21.4 percent through the volatility of the financial crisis.
Capital inflows strongest since 4Q07; Relative Value, Macro lead strategies
Funds of hedge funds (FOF) experienced a narrowly positive net inflow of $250 million, only the second quarter in the last nine in which FOF experienced a net capital inflow. This capital inflow combined with a 3Q performance gain of +3.25 percent brings total FOF AUM to just over $600 billion.
“With the recent performance gains, the hedge fund industry has clearly passed a significant milestone in its evolutionary history,” said Kenneth J. Heinz, President of Hedge Fund Research, Inc. “In the last three years, hedge funds have become more strategically diverse, structurally accessible and transparent to investors, and, as a result, the industry is well-positioned for continued strong growth in coming quarters.”