Hedge funds lure biggest inflow in 7 years in Q1: HFR

INVESTORS poured US$19.8 billion into hedge funds in the first quarter, the biggest inflow of money since the second quarter of 2015, lured by gains some funds are posting amid volatile markets, according to data provider HFR.

Almost US$13 billion flew into event-driven hedge funds, mainly to special situation funds and distressed assets, HFR said.

Still, total hedge fund capital remained roughly flat from December, at US$4 trillion, as performance of equity and event-driven funds was poor in the first quarter.

Both strategies pushed the industry’s total assets down by US$76.2 billion in the quarter, while macro and relative value funds attracted US$50.5 billion, HFR showed.

“Institutional investors are likely to continue increasing their commitment to funds combining effective, volatility-positive, capital preservation with managers offering opportunistic exposure to interest rate and inflation trends, with these effectively complementing existing portfolio holdings and duration,” said Kenneth J Heinz, president of HFR.

Record net inflow of money occured despite hedge funds ending the first quarter of this year 0.8 per cent down, the HFRI Fund Weighted Composite Index showed, but outperforming the S&P index, which declined 4.6 per cent.

Macro hedge funds, however, which bet on macroeconomic trends, rose 6.8 per cent in the quarter, as they navigated well amid highly volatile markets. REUTERS