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Hedge funds start off 2020 with $10.38bn in new money

Friday, February 28, 2020
Opalesque Industry Update - Following a challenging 2019 in which investors pulled approximately $100 billion from the global hedge fund industry, 2020 is starting off on a positive note, with investors adding $10.38 billion to the hedge fund business, according to the just-released eVestment January 2020 Hedge Fund Asset Flows Report.

Hedge fund industry assets stood at $3.31 trillion at the end of January.

January's inflows are potentially an even more positive sign for the industry given that January is historically not a strong month for positive industry asset flows. In four of the five past Januarys, the hedge fund business experienced outflows for the month. And prior to that, from 2010 to 2014, the average January inflow was only about $3.5 billion.

January 2020's $10.38 billion inflows is the second highest January inflows the hedge fund industry has seen since eVestment began tracking monthly flows in 2009 (the highest was 2011 with +$10.81 billion).

Given that market volatility has ramped up and threatens to get worse with concerns about the Coronavirus, it will be interesting to see if investors' appetite for hedge funds ramps up long term.

Some other interesting points from the new report include:

- Among primary hedge fund strategies eVestment tracks, Multi-Strategy funds were the big asset winners, with investors adding $4.53 billion to these funds. And while positive, Multi-Strategy funds have a lot of ground to make up given that they saw investors pull $18.31 billion in 2019 and $19.32 billion in 2018.

- Directional Credit funds saw strong interest in January as well, with investors adding $3.43 billion to these funds, followed by Event Driven funds, which saw investors add $2.25 billion in January.

- Most primary strategies saw inflows in January, except for Managed Futures, Distressed and Macro funds, which saw outflows, but just barely. Managed Futures funds took the biggest hit among primary strategies, with investors pulling $870 million.

- Fund domiciled in the Americas were big asset winners, pulling in $9.74 billion in January. European funds also saw new money, with investors plowing $2.95 billion into these funds, while Asia-domiciled funds saw outflows of $1.38 billion.

In addition to asset flows data, a new addition to this report is a look at interest in hedge funds based on investor and consultant views of the funds on eVestment. Rising or falling interest, on its own and/or in comparison to other asset classes eVestment covers, can indicate potential asset flows (in or out) when considered in conjunction with industry news and global events.

According to this new data, Hedge funds have been capturing an increasing proportion of available interest on eVestment's platform. December 2019 marked the highest level of interest captured in the last three years. While there was a dip in January, the amount of interest captured was still well above normal, and still close to the second highest level captured in the last three years.

And consultants have recently accounted for a rising proportion of views directed toward hedge funds and similar alternatives. Consultant's interests in hedge funds, relative to investors, increased to a three-year high in January 2020.

What do you think?

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