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In the week ending July 2nd 2021, HFR Market Microstructure Report revealed that new hedge fund launches increased in the first quarter of 2021 to the highest level since 4Q17 as hedge funds posted strong performance to begin 2021 and inflationary pressures have begun to emerge in the US. New hedge fund launches increased to an estimated 189 in 1Q2021 and exceeded the estimated number of liquidations for the third consecutive quarter, following eight consecutive quarters of contraction. Launches in 1Q exceeded the 4Q estimate of 175 new funds, implying an annualized launch rate well in excess of the FY 2020 launches to 539, a period which included a record low number of launches in 1Q20 as the global pandemic began.

Meanwhile, event-driven funds gained 1.6% in May, making their YTD return through May the largest among HFM's top-level hedge fund indices (11.9%). This came on the back of intense M&A activity in H1, high-profile activist campaigns and innovation within existing strategies. Record levels of M&A activity in the first five months of 2021, including several large deals, like WarnerMedia's merger with Discovery, presented event-driven hedge fund managers with multifarious opportunities to employ arbitrage strategies.

In the meantime, according to a report by eVestment, investors added an estimated $12.01 billion into hedge funds in May, lifting 2021 net inflow to $39.12 billion. Performance was accretive to asset levels and total estimated industry AUM increased to $3.570 trillion, said eVestment. If the picture in April was broadly positive, May was all that and......................

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