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Alternative Market Briefing

Hedge fund AUM surpasses pre-COVID-19 levels, pushing to a new industry high of $3.7tn

Thursday, November 26, 2020

Laxman Pai, Opalesque Asia:

Hedge fund assets under management (AUM) have finally surpassed pre-COVID-19 levels, pushing to a new industry high of $3,696bn, said a report by Preqin.

This record figure can primarily be attributed to improved performance in September (+5.17%, as measured by the Preqin All-Strategies Hedge Fund Benchmark) compared to the YTD return of +5.01%.

Additionally, the industry experienced its first quarterly inflow (+$17.0bn) since Q1 2018, ending a run of nine consecutive quarters of investor redemptions, the report said.

Equity strategies attracted the most capital (+$21.0bn) followed by CTAs (+$14.6bn), signaling a revived preference for equity and commodity markets .

Credit and macro strategies were less fortunate, posting outflows of $14.2bn and $14.5bn respectively. The equity and credit hedge fund flows directly contrast the mutual fund and ETF flows, which expressed a heavy rotation out of global equities and into global bonds.

CTAs and commodities alike both experienced inflows. The rotation in Q3 could signal that those investors willing to take on equity market risk are choosing hedge funds over mutual funds and ETFs.

At the same time, inflows to hedge funds and commodities indicate investors are prioritizing diversification and low correlation.

Fund managers headquartered in Europe and AsiaPacific posted net inflows of $11.1bn and $24.8bn respectively.

Indeed, 59% of Europe-based funds experienced inflo......................

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