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

Hedge fund capital rose to $2.51 trillion in third quarter says HFR

Saturday, October 19, 2013
Opalesque Industry Update - Total capital invested in the global hedge fund industry surged to a fifth consecutive quarterly record in 3Q13, driven by the highest inflows in over 2 years and eclipsing another milestone of industry expansion. Hedge fund capital rose to $2.51 trillion in 3Q13, an increase of $94 billion over the prior quarter, with growth distributed across all strategy areas, according to the latest HFR Global Hedge Fund Industry Report, released today by HFR, the established leader in indexation, analysis and research for the global hedge fund industry. Investors allocated over $23 billion of net new capital to hedge funds in 3Q13, the highest quarterly inflows since 2Q11.

The HFRI Fund Weighted Composite Index gained +2.2 percent in 3Q13 and has gained +5.5 percent YTD through September, with performance leadership from Equity Hedge and Event Driven strategies.

Third quarter inflows were led by Equity Hedge (EH) strategies, as investors allocated over $10.6 billion to EH funds in the quarter, the highest quarterly inflow for the strategy since prior to the Financial Crisis. The inflow increased total capital invested in EH strategies to $686 billion, returning EH to the largest concentration of hedge fund capital two quarters after it had been surpassed by fixed income-based Relative Value Arbitrage. The HFRI Equity Hedge Index gained +4.0 percent in 3Q13 and over +9.0 percent YTD through September, with leading contributions from Technology/Healthcare and Fundamental Value strategies, which have gained +17.0 percent and +12.9 percent, respectively, YTD.

Investors allocated over $6.4 billion to Event Driven (ED) strategies, continuing the powerful growth of and interest in Shareholder Activist and Distressed hedge funds. ED has received over $16.4 billion of inflows YTD 2013, a stark contrast to the outflow of $6.6 billion from 2012. Activist strategies led ED inflows in 3Q, with these receiving $2.6 billion of new investor capital in the quarter and $7.2 billion YTD; Distressed strategies received $1.9 billion in 3Q. The HFRI Event Driven Index gained +2.8 percent in 3Q13 and +8.6 percent YTD, though Activist strategies have gained +11.9 percent YTD and Special Situations have gained +11.2 percent.

Fixed income-based Relative Value Arbitrage (RVA) continues to lead inflows across the main strategy areas for 2013, with RVA funds receiving over $20.5 billion YTD, of which $6.1 billion occurred in 3Q13. Total RVA AUM increased to over $666 billion, narrowly trailing EH for the largest concentration of hedge fund strategy assets. The HFRI Relative Value Index has gained +4.7 percent YTD, but has posted annualized gains of +10.7 percent since December 2008, with only eight monthly declines in these trailing 57 months.

Macro strategies experienced relatively modest net inflows of just over $300 million for 3Q13, with outflows in Systematic/CTA and Commodity focused strategies offsetting inflows across Discretionary and Multi-strategy areas. As a result of Commodity focused and CTA losses, Macro strategies have posted declines in 2013 with the HFRI Macro Index down -2.0 percent through 3Q.

Mirroring the trend from the prior quarter, flows were positive across the entire spectrum of fund sizes, though they were concentrated in the industry’s most established firms. Investors allocated $18.7 billion of new capital inflows to firms with greater than $5 billion AUM, while $3.6 billion of capital was allocated to firms with less than $1 billion AUM; firms between $1 and $5 billion AUM received inflows of $1.1 billion.

“Hedge fund capital flows in 3Q13 were consistent with trends and themes observed throughout the broader asset management industry, as investors increased allocations to innovative and sophisticated strategies that offer dynamic exposure to an increasingly complex financial market environment,” said Kenneth J. Heinz, President of HFR. “From the U.S. government shutdown and the tapering of quantitative easing, to Abenomics in Japan, unrest in Syria and the impact of recent European elections, the requirement for investors and fund managers to understand geopolitical and macroeconomic influences has never been higher or more relevant. With all of these political undertones remaining fluid and ongoing concerns, and no sign of this changing in the near term, these trends are likely to drive record hedge fund industry capital flows into 2014.”

Press release

HFR (Hedge Fund Research, Inc.) www.hedgefundresearch.com

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. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Investing - Hedge funds get boost from healthcare in 2014, Paulson & Co takes stake in Salix on heels of inventory issues[more]

    Hedge funds get boost from healthcare in 2014 From Valuewalk.com: The healthcare sector started the year on a turbulent note, as stocks of many major biotechnology companies were battered. However, most of the players in this sector have bounced back. The BarclayHedge Healthcare & Biotec

  4. North America - Why Steve Cohen, Connecticut hedge fund billionaire, gives so much in New York[more]

    From Insidephilantrophy.com: Billionaire Steve Cohen was born in Great Neck, New York before attending Wharton, working on Wall Street and then founding SAC Capital Advisors in Connecticut. Though his company (Point72) and foundation are based in Connecticut, Cohen and Alexandra are deeply connected

  5. Investing - Soros buys a highly speculative biotech in the third quarter[more]

    From Fool.com: …The Soros Fund bought 25,000 shares of the struggling small-cap biopharma Aegerion Pharmaceuticals in the third quarter. For those of you who haven't heard of this name, suffice to say that this was a surprising buy in light of the company's recent problems and poor outlook going for