Sat, Mar 28, 2015
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. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. M&A - Hedge funds no longer attractive targets for banks, reinsurers, Blackstone buys stake in Christopher Pucillo’s Solus event-driven hedge fund[more]

    Hedge funds no longer attractive targets for banks, reinsurers From Institutionalinvestor.com: Swiss RE, the world’s second-largest reinsurer, is looking to sell its 15 percent stake in Jersey, Channel Islands–based hedge fund firm Brevan Howard Asset Management. Morgan Stanley reported

  4. Opalesque Radio: Threadneedle expects continuing equity volatility this year[more]

    Benedicte Gravrand, Opalesque Geneva: Investors should expect more volatility, which is signaling a "slow moving" top to the market, KKM Financial’s founder and CEO Jeff Kilburg told CNBC on Monday. And this volatility is going

  5. Hedge funds show strong performance of 2.52% so far in 2015[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry got off to a strong start in 2015 "completely unmindful" of the poor performance last year, according to data provider Preqin. According to Preqin, following a year which saw the average he

 

banner