BY Richard Summerfield
Following five consecutive quarters of net outflows, Q1 2017 saw hedge funds attract net capital inflows of $19.7bn, according to a new report from Preqin. This pushed total assets held by hedge funds up 3.2 percent, and took assets under management (AUM) to a record $3.35 trillion.
Further, all leading hedge fund strategies experienced a percentage increase in total assets during Q1. Further, macro strategies funds attracted $11.1bn of net inflows to expand beyond $1 trillion in AUM for the first time.
“Five successive quarters of net outflows have been reversed in Q1 2017, as the industry recorded the largest quarterly influx of capital since Q2 2015. Along with the continued run of positive returns being made by most leading strategies, this has helped propel the industry to a record size,” said Amy Bensted, head of hedge fund products for Preqin
She continued: “2016 was undeniably a difficult year for the hedge fund industry, with net outflows reflecting a reduced appetite for the asset class from institutions following a sustained period of low returns to investors since 2014. However, following an extended run of improved performance since March 2016 – the 12-month return of hedge funds is 10.67 percent – investor sentiment seems to be improving in 2017, which is reflected by inflows over the start of the year.”
North America-based hedge fund managers attracted the greatest amount of capital over Q1 2017, with net inflows of $19.9bn. Europe was the only region to lose assets over Q1 with net outflows of $8.5bn. Asia-Pacific had inflows of $2.2bn
Q1 was a successful period for all fund sizes, which were able to attract new capital . Fifty-three percent of funds between $500m and $999m saw inflows, however smaller funds were also successful. Forty-seven percent of funds with less than $100m saw inflows, while just 36 percent of funds endured outflows.
Forty-six percent of outflows in 2016 were from equity strategies, a trend that continued in Q1 2017 due to $10bn worth of investor redemptions.
Report: Q1 2017 Hedge fund asset flows