Hedge fund investor flows climbed to their highest level in 12 months in August, with net subscriptions continuing to rise despite heightened inflation concerns, geopolitical risks and broader market volatility, according to SS&C Technologies.
The SS&C GlobeOp Capital Movement Index increased 0.92% in August to 132.34, marking its seventh consecutive month of positive net inflows. The index has gained 5.25 points over the past year, pointing to sustained demand for hedge fund strategies from investors despite a challenging market backdrop.
Bill Stone, chairman and chief executive of SS&C Technologies, said the combination of elevated inflation, geopolitical uncertainty and a shift in Federal Reserve policy was contributing to increased volatility.
He argued that the environment reinforced the case for maintaining long-term allocations to hedge funds, particularly strategies designed to generate returns with relatively low correlation to traditional asset classes.
The stronger capital flows contrast with weaker hedge fund performance in July. The SS&C GlobeOp Hedge Fund Performance Index recorded a gross return of -2.93% for the month.
The asset-weighted index provides a monthly snapshot of aggregate hedge fund performance across funds administered by SS&C GlobeOp. The latest figure is an initial estimate, with interim and final performance figures released over the following two months.
SS&C said the index is designed to provide a broad measure of returns without selection or survivorship bias and is structured to avoid allowing any individual hedge fund strategy to disproportionately influence the aggregate result.
Since its launch in 2006, the index has shown a correlation of approximately 25% to 30% with major equity market indices, according to SS&C, highlighting the relatively diversified return profile of the strategies represented.
The Capital Movement Index, meanwhile, measures net subscriptions and redemptions across hedge funds administered on the SS&C GlobeOp platform, relative to assets under administration.
The August increase represents a 0.92-point rise from July and brings the index to its highest level in a year. The data are based on actual capital movements rather than investor intentions or surveys, with the figures calculated and confirmed from subscriptions and redemptions processed through the platform.
The continued inflows suggest that investors are maintaining their appetite for hedge funds even as market conditions become more uncertain. For allocators, the appeal of diversification and strategies capable of generating returns independently of equity-market direction may be becoming more important as volatility rises.
SS&C GlobeOp is due to publish its next Capital Movement Index update on 14 September.
