Hedge fund assets under management have reached an all-time high of USD2.938 trillion, according to eVestment’s April 2014 Hedge Fund Asset Flows Report.
The previous high was set in Q2 2008 just a few months before the height of the financial crisis.
Investors allocated USD17.9 billion to hedge funds in April, the third consecutive month of elevated inflows. Investors have added USD68.4 billion through April, far surpassing inflows from 2013 and 2012 for the same time frame.
Investors continued to show preference to equity strategies over credit in April, however equity fund flows were noticeably lower than over the prior three months, a possible sign that recent performance losses are weighing on investor sentiment. YTD inflows into equity strategies of USD48.3 billion is nearly triple the level for the universe from all of 2013.
Credit fund flows were positive, but near flat for the second consecutive month. There appear to be differing opinions on the potential value of credit strategies in the current rate environment, despite its industry leading YTD returns. Credit fund AUM is at an all-time high, however the universe surpassed its pre-crisis peaks back in 2010 and has been in record territory since. Persistent growth has been driven by the structural shift in the industry’s investor base as institutions have overtaken FoFs as primary investors and shown an interest in alternative exposures to familiar markets.
Event driven strategies continue to receive large new allocations and despite recent elevated losses in March and April, activist funds continue to be favourites in the space.