10 Jan 2011
Hedge funds recorded the largest quarterly asset jump in over three years, with total industry capital increasing by $120 billion in 3Q10 according to data released by Hedge Fund Research, Inc. The capital increase reflects a combination of both performance-based gains and new capital inflows, bringing total assets invested in the hedge fund industry to $1.77 trillion as of 3Q10.
The HFRI Fund Weighted Composite Index posted a gain of +5.17% in the third quarter, bringing the cumulative NAV of the broad-based index to exceed the previous record level set in October 2007. After three years, the industry has emerged from the worst cumulative performance drawdown in its history, which had exceeded -21.4% through the volatility of the financial crisis.
Investors allocated a net $19 billion of new capital to the hedge fund industry in the third quarter, the largest quarterly capital inflow since the fourth quarter of 2007. Relative Value and Macro strategies each experienced inflows of nearly $7 billion, while Event Driven funds saw inflows of $5.7 billion. Despite a 3Q performance gain of +5.9%,
Equity Hedge strategies experienced a net outflow of nearly $600 million. Relative Value Arbitrage and Event Driven funds have been the strongest areas of performance YTD through 3Q, with gains of +8.1% and +6.7%, respectively.
Funds of hedge funds experienced a narrowly positive net inflow of $250 million, only the second quarter in the last nine in which FOF experienced a net capital inflow. This capital inflow combined with a 3Q performance gain of +3.25% brings total FOF AUM to just over $600 billion.
The HFRI Fund Weighted Composite Index posted a gain of +5.17% in the third quarter, bringing the cumulative NAV of the broad-based index to exceed the previous record level set in October 2007. After three years, the industry has emerged from the worst cumulative performance drawdown in its history, which had exceeded -21.4% through the volatility of the financial crisis.
Investors allocated a net $19 billion of new capital to the hedge fund industry in the third quarter, the largest quarterly capital inflow since the fourth quarter of 2007. Relative Value and Macro strategies each experienced inflows of nearly $7 billion, while Event Driven funds saw inflows of $5.7 billion. Despite a 3Q performance gain of +5.9%,
Equity Hedge strategies experienced a net outflow of nearly $600 million. Relative Value Arbitrage and Event Driven funds have been the strongest areas of performance YTD through 3Q, with gains of +8.1% and +6.7%, respectively.
Funds of hedge funds experienced a narrowly positive net inflow of $250 million, only the second quarter in the last nine in which FOF experienced a net capital inflow. This capital inflow combined with a 3Q performance gain of +3.25% brings total FOF AUM to just over $600 billion.
"With the recent performance gains, the hedge fund industry has clearly passed a significant milestone in its evolutionary history,” said Kenneth J. Heinz, President of Hedge Fund Research, Inc. “In the last three years, hedge funds have become more strategically diverse, structurally accessible and transparent to investors, and, as a result, the industry is well-positioned for continued strong growth in coming quarters.”
