Hedge funds enjoyed an unusual inflow in January, the 11th month in a row that investors added money to the industry.
The global hedge fund industry took in $7.1 billion in new money, bringing total assets to $1.5 trillion, according to TrimTabs Investment Research and BarclayHedge. Hedge funds now manage 23.6% more than they did at rock bottom in April.
“January bucked the trend,” BarclayHedge CEO Sol Waksman said. “The first month of the year typically delivers a redemption-driven outflow. The fact that hedge funds managed to attract money is a good sign.”
Funds of hedge funds, by contrast, took a big hit in January, as investors increasingly favor single-manager funds. Clients pulled money from multi-manager funds for the 17th of the past 19 months, with an outflow totaling $12.6 billion.
“Funds of funds have performed poorly,” Vincent Deluard, global equity strategist at TrimTabs, said. “They returned only 12.3% in the past year, less than half of the industry’s average 25.9% gain. That investors are walking away does not surprise.”
Investors flocked to distressed securities hedge funds in January, with inflows totaling 6.2% of assets. Multi-strategy funds, on the other hand, suffered the biggest outflow.