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Investors return to hedge funds
20 March 2014
Report shows continued equity preference
eVestment’s February 2014 hedge fund asset flows
report has found that investors allocated more to hedge funds
in February 2014 than in any other month since eVestment began
tracking monthly flow data in October 2008.
Investors added an estimated $41bn into hedge funds during the
month after outflows in December 2013 and light inflows in
January 2014. Performance gains added an additional $45.9bn,
bringing February’s asset increase to $86.9bn or
3.1% - the industry’s largest asset growth since
performance gains drove a large increase in May 2009.
Total industry assets reached $2.93trn in February, only
$11.9bn below the all-time peak set in Q2 2008.
Investor preferences for equity over credit strategies
persisted for a fourth consecutive month, the longest streak of
equity fund dominance since assets began to chase the
post-financial crisis equity market recovery.
However, credit strategies showed a significant rebound in
investor sentiment in February. Five months after US 10YR rates
began to rise sharply in May 2013, investor flows reversed an
almost two year-long streak of inflows. In the ensuing four
months investors withdrew over $3bn, but
February’s inflow more than reversed this.
Investors dipped back into macro strategies in February, with
positive flows to the universe for the first month since
September 2013. Prior to February and since the end of 2012,
investors had removed an estimated $15.8bn from macro funds in
the face of mediocre aggregate returns.
Event driven funds continue to be near the top of
investors’ preferred hedge fund strategies and
have received an estimated $10.3bn in 2014, already surpassing
the universe’s estimated inflows for 2013.
Activist funds received about 41% of all event driven strategy
inflows in February, receiving an estimated $2.1bn of new
capital and bringing 2014 estimated inflows to just over $5bn.
Total AuM in funds employing activist strategies reporting to
eVestment reached nearly $73bn.