Report: Hedge Funds Saw 'Virtually All' 2014 Inflows In H1

Jan 27 2015 | 10:01am ET

Hedge fund assets declined 0.61% in December 2014, says eVestment, in an odd year that saw “virtually all” inflows into the space in the first half.

Redemptions were high in the last month of the year, which has been the case for the past four years, according to the data provider, and is likely due to seasonal factors.

Investors pulled $13.2 billion from hedge funds in December, for Q4 outflows of $8.4 billion, the industry’s first quarterly decline in six quarters and its largest outflow since Q4 2012.

That said, 2014's total inflow was $98.2 billion—the industry's largest since 2007.

Also to be noted: managed futures funds finally saw some love. After 15 straight months of redemptions, the strategy, which produced some of the best returns in 2014, recorded net inflows of $1.0 billion in December. Good performance was particularly rewarded—the 10 managed futures strategies reporting the biggest inflows returned an average of 12.3% in H2 2014.

Investors pulled $4.9 billion from credit strategies in December, more than in any month over the last three years.

Event-driven funds saw modest outflows while activist funds saw modest inflows in December.

Multi-strategy and long/short equity funds, which saw strong investor interest in H1 2014, lost $4.1 billion and $3.2 billion in December, respectively, but full year inflows for each surpassed 2013 totals.

Said eVestment in its report:

“2014 was an interesting year for hedge fund flows with virtually all of the year’s inflows coming in the first six months. Whether that is due to seasonal allocation preferences by institutional investors, or a negative reaction to performance in the face of global volatility, is still unknown. What we have seen in each of the last three years has been redemptions into year-end, followed by large allocations in the first quarter of the new year. This is likely a redistribution of the prior year’s redemptions along with new money coming in. If we do not see that trend persist into 2015, then it could be a sign of a shift of sentiment towards the industry as a whole, however that is contrary to our expectations for 2015.”

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