Mon, Sep 22, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge Fund Investors Rotate Into Macro Arbitrage Strategies For 2012, AuM Now at $2.01tln: HFR

Thursday, January 19, 2012
Opalesque Industry Update - Total capital invested in the hedge fund industry regained the $2 trillion milestone to conclude 2011, according to data released today by HFR (Hedge Fund Research, Inc.), the leading provider of data, indices and analysis of hedge funds. The industry originally eclipsed $2 trillion in AUM in 1Q11 and peaked at $2.04 trillion at mid-year before declining to $1.97 trillion to end the volatile 3Q11. Total hedge fund AUM finished the year at $2.01 trillion, as 4Q11 performance gains offset a nominal net capital outflow of $127 million, a figure representing approximately 0.007% of total industry AUM. For the full year 2011, investors allocated $70 billion of net new capital to hedge funds, a volatile performance year in which the HFRI Fund Weighted Composite Index declined by -5.0 percent, only the 3rd calendar year decline since 1990.

Macro, Arbitrage lead strategy allocation divergences

Investors exhibited a clear preference for Macro and Relative Value Arbitrage strategies in both the fourth quarter and the full year, while equity strategies experienced net withdrawals for 4Q. Discretionary and quantitative Macro hedge funds, which actively position across liquid currency, commodity, fixed income and equity markets experienced net inflows of $7.9 billion for 4Q and $27.9 billion for 2011. Relative Value Arbitrage (RVA) strategies, which are primarily fixed income-based, attracted a net inflow of $5.9 billion in 4Q and $35.9 billion for 2011; RVA was the only main strategy to post a performance gain for 2011, with the HFRI Relative Value Index gaining +0.51 percent for the year. Following the difficult 3Q11, Equity Hedge and Event Driven experienced net outflows in 4Q11 of $8.6 and $5.3 billion, respectively, reducing full year inflows to $2.2 billion in Equity Hedge and $4.6 billion in Event Driven.

Nearly 60 percent of all hedge funds experienced outflows for the quarter, while just over 40 percent attracted inflows. For the full year 2011, investors allocated $50.7 billion of net new capital to firms with greater than $5 billion in AUM, while firms with less than $5 billion experienced a combined net inflow of $20 billion. Concluding a difficult year for Funds of Hedge Funds (FOF), investors withdrew $7.2 billion in 4Q11, bringing FOF total capital to $629 billion.

"Capital flows in both 4Q and 2011 have followed a consistent theme of reducing directional equity market beta while increasing exposure across currency, commodity and fixed income strategies, as investors position for continuing macro volatility and spread convergence in 2012," said Kenneth J. Heinz, President of HFR. "The complexity and breadth of the European debt and currency crisis contributed to a challenging environment for hedge funds in 2011 and, as a result, investors are tactically positioning exposures to provide positive portfolio optionality and to monetize opportunities created by fluid developments in this ongoing crisis."

Press Release

HFR (Hedge Fund Research, Inc.): Source

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Institutions - North Carolina workers call on state pension to dump up to $6bn in hedge funds, UK pension fund criticizes hedge fund fees[more]

    North Carolina workers call on state pension to dump up to $6bn in hedge funds From Forbes.com: The State Employees Association of North Carolina this afternoon called on state Treasurer Janet Cowell to withdraw all investments in hedge funds, which appear to amount to approximately $6 b

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali