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Hedge fund sentiment turns to equities
21 August 2013
Strong inflows of over $10bn for multi-asset strategies
Hedge fund trends
Hedge fund flows increased by $5.7bn during July, the best monthly inflow in the last six months and taking total industry assets under management to $2.68trn, according to hedge fund industry analysts eVestment.
Equity strategies saw inflows of $1.15bn during the month, which eVestment said was a possible sign of a sign of a shift in investor sentiment.
It added that equity strategies had not had two months of net inflows so close to one another since mid-2011, “two months prior to the largest post-financial crisis equity market sell-off to date”.
Multi asset funds saw the vast majority of inflow, with $10.19bn invested, while fixed income/credit and commodities funds saw outflows of $3.61 and $1.25bn, respectively.
The firm said that macro fund flows rebounded with net inflows of $7.6bn during the month - the largest inflow since January 2010 and second highest inflows since July 2008, just a couple of months before the height of the financial crisis.
Credit outflows were the highest in any single month since January 2012.
eVestment said mortgage backed security strategies continued to face redemptions, with outflows of $4.1bn – the largest monthly outflow since 2006 – on the back of poor performance, although this masks the rapid increase in MBS hedge fund assets under management since late 2009.
It said the losses, which were the worst for more than four years, “may be an indication of the impact of the steepening US yield curve and potential for the Fed’s tapering of its asset purchase program on investor sentiment towards the strategy.”
Emerging markets fund flows also had a poor month, with the worst flows for 12 months. eVestment said the “surge” in redemptions, which saw outflows of over $2.6bn, was driven mainly by redemptions from EM credit funds, which accounted for more than 60% of outflows.