Tue, Jun 28, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFR: Investors allocated $4.1bn to hedge funds in 2Q12, but total industry AuM declined 1.3% (to 2.1tln)

Thursday, July 19, 2012
Opalesque Industry Update – Investors continued to allocate new capital to the hedge fund industry in 2Q12, exhibiting a clear and continued preference for strategies with characteristically low exposure to global equity markets, according to the latest HFR Global Hedge Fund Industry Report, released today by HFR, the global leader in the indexation and analysis of the hedge fund industry.

Investors allocated $4.1 billion in net new capital to hedge funds in 2Q12, bringing net inflows in 1H12 to over $20 billion. Despite the inflow, total hedge fund capital pulled back from the record level set in 1Q12 as a result of the -2.7 percent performance of the HFRI Fund Weighted Composite Index in 2Q12, resulting in a total industry capital decline of -1.3 percent from $2.13 trillion to $2.10 trillion.

Consistent with the trend from prior quarters, 2Q12 inflows remained concentrated in the industry’s largest firms, with over $11 billion allocated to firms with greater than $5 billion in AUM, while firms with less than $5 billion experienced a net redemption of approximately $6.9 billion. Inflows in 1H12 exceeded the $8.5 billion in inflows from 2H11 but were only approximately one-third of the $62 billion in net inflows from 1H11. Approximately 30 percent of all funds experienced inflows in 2Q12 with these totaling $43.3 billion in total net inflows, while 70 percent of all funds experienced net outflows, totaling $39.2 billion.

Investors also continued to exhibit a preference for Fixed Income-based Relative Value Arbitrage (RVA) strategies in 2Q12, allocating nearly $10 billion to these funds, with a high concentration to RVA: Multi-Strategy funds. The HFRI Relative Value Index gained +4.2 percent in 1H12, leading other hedge fund strategies, and RVA has posted positive monthly performance in 35 of 42 months since December 2008. Total hedge fund capital in Relative Value strategies increased to $555 billion as of the end of 2Q12, approaching the $570 billion invested in Equity Hedge, the industry’s largest strategy area. Equity Hedge experienced a net redemption for 2Q12 of $1.3 billion; the HFRI Equity Hedge Index gained +2.2 percent in 1H12.

Reversing the inflow from the prior quarter, investors withdrew $3.5 billion from Macro strategies, with outflows concentrated in CTA and Currency strategies. Ending the first half with a June decline of -1.4 percent, the HFRI Macro Index posted a decline of -0.5 percent for 1H12. Despite a gain of +2.5 percent in 1H12, Event Driven strategies experienced a modest withdrawal of $900 million in 2Q.

“Hedge fund performance and capital flows in 1H12 reflect the fluid and volatile environment driven by the continuing European sovereign debt crisis and the recent softening of US economic data. Hedge fund gains in 1H12 also represent an important bifurcation of investor views regarding near term economic growth prospects, with equity market gains suggesting an improved outlook while historically low fixed income yields suggest an elevated risk of muted growth,” stated Kenneth J. Heinz, President of HFR. “The hedge fund industry has evolved as an integral component of institutional allocations, allowing investors to pursue target return objectives in a transparent, risk-controlled environment, while acting as a liquidity provider and market risk participant. As financial institutions retrench from many lending and trading activities, hedge funds are likely to experience continued growth and expansion in 2H12 as a result of these trends.”

HFR launches 3 new HFRX Indices
HFR is pleased to launch the following new HFRX Indices, expanding the family of HFRX Indices to 76. Consistent with many of the current HFRX Indices, each of the following includes daily performance transparency. For more information, please visit www.hfrx.com

HFRX Emerging Markets Composite Index includes multiple hedge fund strategies with geographic exposure to one or more Emerging Markets regions and combination of asset classes with emphasis on global macroeconomic, political or specific secular market growth trends.
HFRX Fixed Income - Credit Index includes strategies with exposure to credit across a broad continuum of credit sub-strategies. The investment thesis across all strategies is predicated on realization of a valuation discrepancy between the related credit instruments.
HFRX MLP Index includes Master Limited Partnership strategies which are typically exchange listed partnerships that engage in certain businesses, mostly pertaining to the transportation, extraction and storage of certain commodities and natural resources including, but not limited to, oil, natural gas and coal.

(press release)

HFR (Hedge Fund Research, Inc.) is the global leader in the alternative investment industry, specializing in the indexation and analysis of hedge funds.

Bg

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. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s