Hedge Fund Assets Hit Record $2.25T In 2012

Jan 18 2013 | 1:23pm ET

Hedge fund assets reached a record $2.25 trillion as of the end of 2012, having increased by $60 billion in the fourth quarter.

Hedge Fund Research says the industry posted both performance gains and inflows in Q4: the HFRI Fund Weighted Composite Index added 1.3% on the month, bringing its full-year gains to 6.2%; and the industry saw net asset inflows of $3.4 billion, for full-year gains of $34.4 billion.

The biggest winners in 2012 were relative value arbitrage funds, which were up 10.5% on the year and attracted new capital worth $41.4 billion (including $6.5 billion added in Q4). Such funds now manage $609 billion, overtaking equity hedge strategies for the first time since 1991.

Event-driven funds were the best performers in Q4 2012, adding 3.22%. They ended the year up 8.6%, but saw net outflows—investors withdrew $3.5 billion in Q4 and $6.6 billion for the full year. Total event-driven assets at year's end were $558 billion.

Equity hedge strategies added 1.86% in Q4, despite which investors withdrew $1.2 billion during the last quarter ($10.4 billion on the year). Total assets in equity hedge strategies finished 2012 at $598 billion.

Macro hedge funds ended 2012 in the red, down 0.40%, with losses in systematic/quantitative CTA strategies, but investors still poured a net $1.66 billion into these funds in Q4 2012 ($10.3 billion for the full year) putting macro assets at $488 billion as of year's end.

HFR also announced the launch of the HFRU family of indexes designed to track UCITS compliant funds. Included are equity hedge, event driven, macro and relative value arbitrage indices along with the HFRU Hedge Fund Composite Index, which gained +4.9% in 2012.

“Performance and capital flow trends, including the rise of relative value arbitrage funds and the proliferation of hedge funds compliant with UCITS guidelines, reflect a significant and fundamental shift in the hedge fund landscape as the industry evolves to meet investor requirements in coming years,” said Kenneth J. Heinz, president of HFR, in a statement.

“Investor preferences have moved away from opaque, black-box, illiquid and high equity market beta strategies and have moved to embrace high quality strategies offering transparency, liquidity, tactical flexibility, strategic innovation, accessible account minimums, institutional risk management and consistent performance gains. In these ways, the evolved hedge fund industry will continue to appeal globally to individual investors as a vehicle to access sophisticated, transparent, long-short strategies, as well as to institutional investors as a powerful complement to existing equity and fixed income exposures.”


In Depth

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

Strippers Accused Of Robbing Hedge-Fund Manager Face Jail

Oct 20 2014 | 9:20am ET

A group of alleged stripper-thieves—whose victims include a hedge-fund manager...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.