Preqin: Hedge funds continue to record positive inflows
31 May 2018 London
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Hedge funds recorded net inflows of $17 billion in Q1 2018, continuing a streak of five consecutive quarterly inflows, according to data provider, Preqin.
This represents a significant increase compared to the final quarter of 2017, which saw inflows of just $500 million.
Q1 2018 brought total positive net asset flows to $61 billion since Q4 2016—the last time the industry saw net outflows—this has pushed total hedge fund assets to $3.6 trillion as of the end of the quarter.
Despite negative monthly performance in February and March, commodity trading advisers saw net inflows totalling $13 billion in Q1 2018, the largest of any leading strategy.
By contrast, the largest top-level strategies by assets under management—equity, macro and multi-strategy funds—experienced the largest net outflows of $7.6 billion, $1.3 billion and $500 million respectively.
Geographically, managers based in North America saw the greatest inflows in the quarter, totalling $15 billion. This has driven aggregate assets held in the region to $2.6 trillion (73 percent of the global industry).
Amy Bensted, Preqin’s head of hedge fund products, said that the figures indicate that investor sentiment towards hedge funds remains strong, despite a challenging start to the year in regards to performance.
She added: “Although past performance is not indicative of future returns, strong performance remains a key indicator of future asset flows. The majority of hedge funds that posted returns of less than -5 percent in 2017 posted net outflows this quarter.”
“This trend shows up even more pointedly over the long term. If fund managers want to attract investor capital in an increasingly competitive market, they will have to not only cater to investors’ preferences, but also show that their funds can produce consistent positive returns.”
This represents a significant increase compared to the final quarter of 2017, which saw inflows of just $500 million.
Q1 2018 brought total positive net asset flows to $61 billion since Q4 2016—the last time the industry saw net outflows—this has pushed total hedge fund assets to $3.6 trillion as of the end of the quarter.
Despite negative monthly performance in February and March, commodity trading advisers saw net inflows totalling $13 billion in Q1 2018, the largest of any leading strategy.
By contrast, the largest top-level strategies by assets under management—equity, macro and multi-strategy funds—experienced the largest net outflows of $7.6 billion, $1.3 billion and $500 million respectively.
Geographically, managers based in North America saw the greatest inflows in the quarter, totalling $15 billion. This has driven aggregate assets held in the region to $2.6 trillion (73 percent of the global industry).
Amy Bensted, Preqin’s head of hedge fund products, said that the figures indicate that investor sentiment towards hedge funds remains strong, despite a challenging start to the year in regards to performance.
She added: “Although past performance is not indicative of future returns, strong performance remains a key indicator of future asset flows. The majority of hedge funds that posted returns of less than -5 percent in 2017 posted net outflows this quarter.”
“This trend shows up even more pointedly over the long term. If fund managers want to attract investor capital in an increasingly competitive market, they will have to not only cater to investors’ preferences, but also show that their funds can produce consistent positive returns.”
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