Preqin: Hedge Fund Industry Inflows Hit $20B In Q1/17

May 17 2017 | 12:11am ET

Hedge funds attracted net capital inflows of nearly $20 billion in the first quarter of this year, according to new research from Preqin, reversing five straight quarters of net outflows and pushing total industry AUM to $3.35 trillion. 

Combined with fairly consistent performance gains for much of the past year, the influx of fresh capital pushed total assets held by hedge funds grow up 3.2% in the first quarter, Preqin said in a statement. All leading hedge fund strategies experienced a percentage increase in total assets and, notably, macro strategies funds expanded beyond $1 trillion in AUM for the first time. 

Key highlights from Preqin’s Q1 2017 Hedge Fund Asset Flows Report: 

  • Macro strategies funds and event driven strategies funds attracted the largest amount of new capital 
during the quarter, recording net inflows of $11.1 billion and $8.9 billion respectively. 

  • With inflows of $1.1 billion, the total assets held by niche strategies grew 10% to $16 billion, the largest percentage increase of any strategy. 

  • Nearly half of all outflows (46%) in 2016 were from equity strategies, and that trend continued in Q1 2017 as the strategy experienced $10.0 billion of investor redemptions. 

  • CTAs continue to attract new investor capital with inflows of $7.2 billion in Q1 2017 and, after inflows of $25.5 billion in 2016, now hold $256 billion in assets. 

  • North America-based hedge fund managers attracted the greatest amount of capital over Q1 2017 with net inflows of $19.9 billion; Europe was the only region to lose assets over Q1 with net outflows of $8.5 billion. 

  • Fifty-three percent of hedge funds that achieved a return of 5% or more during 2016 received investor inflows in Q1 2017, and 56% of funds that achieved an annualized three-year return of more than 5% saw inflows. In contrast, only a fifth of vehicles that generated three-year returns of -5.00% years attracted inflows. 

  • All fund sizes were able to attract new capital in Q1 2017; 53% of funds between $500 million and $999 million saw inflows while smaller funds were also successful: 47% of funds with less than $100mn saw inflows with just 36% losing assets. 

“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,” said Amy Bensted, head of hedge fund products for Preqin. “However, following an extended run of improved performance since March 2016 – the 12-month return of hedge funds is 10.67% - investor sentiment seems to be improving in 2017, which is reflected by inflows over the start of the year.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.

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