Hedge fund assets up in January as performance offsets investor redemptions

Investors pulled a modest USD1.66 billion from the global hedge fund industry in January. However, strong hedge fund performance almost across the board in January offset those redemptions, lifting total industry assets to USD3.214 trillion, according to eVestment’s January 2019 Hedge Fund Asset Flows Report.

Multi-Strategy hedge funds saw a major turnaround in investor sentiment to start off the year, with investors adding USD4.34 billion to these funds in January. This is a major contrast to the -USD7.87 billion investors removed from Multi-Strategy funds in Q4 2018 and the -USD19.32 billion investors removed for full year 2018. It will be interesting to see if strong inflows to Multi-Strategy funds to start off the year signal any broader level of interest in the hedge fund industry as the year progresses.
 
Among hedge fund types, Commodities, Multi-Asset and Fixed Income/Credit were all asset winners, with Commodities funds seeing a solid +USD2.19 billion in new assets.
 
Despite strong performance of Long/Short Equity hedge funds to start the year, investors have continued to pull money from these strategies, to the tune of -USD5.93 billion. This was the largest redemption among primary hedge fund strategies and is on top of the -USD10.74 billion investors pulled from Long/Short Equity funds last year.
 
Most other primary strategies meanwhile, including Managed Futures, Macro, Relative Value Credit and Event Driven funds, also saw investor outflows, although these outflows were small.
 
In addition to Multi-Strategy funds, Directional Credit funds were among the primary strategies seeing new investor money in January, up +USD2.05 billion. MBS Strategy funds and Convertible Arbitrage funds also eked out positive investor flows in January at +USD520 million and +USD310 million respectively.