Sat, Apr 21, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFR: hedge fund assets track HFRI to record In 1Q13; assets grow to $2.375tn

Friday, April 19, 2013
Opalesque Industry Update: Total capital invested in the global hedge fund industry expanded during the first quarter at the fastest rate since 2010 as global financial institutions positioned for both growth and volatility across fixed income, equities, currencies and commodities. Total assets under management increased by $122 billion, the largest increase since 4Q10, bringing industry capital to a record $2.375 trillion, according to the latest HFR Global Hedge Fund Industry Report, released today by HFR, the established global leader in the indexation, analysis and research of the hedge fund industry. Investors allocated $15.2 billion of net new capital to hedge funds in 1Q13, marking the highest inflow since 1Q12. Hedge funds have experienced capital inflows in 14 of the 15 quarters.

Fixed Income-based Relative Value Arbitrage (RVA) strategies led capital inflows in 1Q13 with a net asset inflow of $9.4 billion. RVA funds have led all strategies in capital inflows in each of the past 3 years, making it the largest area of assets by strategy, with nearly $640 billion in total capital. RVA growth has been driven by steady, consistent performance gains; the HFRI Relative Value Index gained +10.6% in 2012 and +3.3 percent in 1Q13, while producing gains in 45 of 51 months since December 2008. Investors allocated a net $3 billion to Macro strategies in 1Q13, inclusive of nearly $5 billion in net inflows to Systematic CTA strategies. The HFRI Macro Index was the weakest area of industry performance in both 2012 and 1Q13, declining by 0.3 percent last year and gaining only +1.4 percent in the first quarter.

Equity Hedge (EH) was the strongest strategy area of industry performance in 1Q13, with the HFRI Equity Hedge Index gaining +5.2 percent; investors allocated $1.86 billion of net new capital to EH strategies in the first quarter. Event Driven (ED) strategies experienced a net inflow of nearly $1 billion, with inflows in Activist and Credit Arbitrage strategies slightly offset by outflows in other ED strategies.

Flows concentrated in established funds

Investor allocations were spread across an array of firm sizes, although the majority of net inflows were concentrated in the industry’s most established firms. Firms managing less than $500 million in capital experienced net inflows of approximately $1.5 billion, reversing the trend of the prior quarter. Despite investor redemptions from several large funds, firms with greater than $5 billion AUM recorded net inflows of over $10 billion in 1Q13, increasing the total capital managed by these firms to more than $1.6 trillion. Total capital invested in the hedge fund industry via Fund of Hedge Funds increased to $650 billion, as performance-based asset gains were pared by net outflows of nearly $5 billion.

In-line with the performance of U.S. equities, the HFRI Fund Weighted Composite Index gained +3.8 percent in 1Q13, ending the quarter with an index value of 11,474, which represents a new performance high watermark for the hedge fund industry. Individually, 45 percent of all hedge funds reached their respective high watermarks in the first quarter.

The total of net new capital from funds which experienced inflows in 1Q13 was $55.6 billion, while the total from funds that suffered net outflows was $40.4 billion, resulting in the overall net asset inflow of $15.2 billion. Fifty-seven percent of all hedge funds experienced net capital inflows in 1Q13.

“While US equities reached record levels in 1Q13, investors and asset managers were confronted with a complex environment dominated by the global asset pricing implications of aggressive quantitative easing and stimulus efforts, new European banking crisis developments, high profile shareholder activist campaigns and sharp reversals in currency markets, all preceding a dramatic commodity correction that began shortly after the close of the quarter,” stated Kenneth J. Heinz, President of HFR. “Many global financial institutions and sovereign wealth funds have evolved from their traditional allocations to a fully integrated portfolio model, utilizing hedge funds as a mechanism to access these dynamic and interconnected markets and to mitigate the risk inherent in these exposures. As the strong risk-on environment has faded in early 2Q13, we expect a greater institutional emphasis on alternatives to continue and expand into mid-year 2013.”

HFR

Press Release

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. Investing - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its