Traditional long-short equity hedge funds posted their first quarter of net inflows since 2022 in the first three months of the year, attracting $22.8bn – the largest inflows across any hedge fund strategy, according to a report by Business insider citing new data from Nasdaq’s eVestment.
The renewed allocator interest in discretionary stock-pickers accounted for the majority of the $27.6bn that entered the $5.7tn hedge fund industry over the quarter.
The reversal in sentiment marks a notable shift from recent years, when some equity-focused managers saw significant redemptions after being heavily exposed to high-growth tech names that were hit hard by inflation and rising interest rates. Melvin Capital, one of the most prominent casualties of the 2021-22 equity market upheaval, was forced to shut its doors following historic losses.
Now, with some of the largest multi-strategy platforms, including Citadel, Millennium, and Point72, largely closed to new capital, and volatility returning to markets amid renewed trade policy uncertainty, institutional investors are rediscovering the appeal of bottom-up, fundamentally driven stock-pickers. According to eVestment’s report, these managers managed to hold flat in Q1 despite broad equity market declines — a sign, the report notes, that “equity managers were relatively well positioned heading into the quarter.”
While the $22.8bn in inflows is a strong signal of allocator support, it represents only a partial recovery — stockpicking funds have seen a net $83.8bn in outflows over the last nine quarters.
