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Hedge Funds Inflows Increased In May, AUM At $3.171 Trillion

Hedge Funds Investor Inflows Increased In May, AUM At $3.171 Trillion by eVestment

Investors return to equity strategies, multi-strategy continues to dominate and macro interest rebounds

Total hedge fund assets increased 1.37% in May 2015, bringing the industry’s total assets under management to $3.171 trillion. Investors added $23.7 billion of new capital to the industry in May, while performance increased AUM by an estimated $19.3 billion.

With May’s $23.7 billion inflow, investors have added an estimated $65.8 billion into hedge funds in the first five months of 2015. The inflow is below the level seen at this point in 2014 ($93.6 billion), but very much above the average YTD flows for the same period across the five prior years ($45.9 billion).

Hedge Funds Inflows

Multi-strategy hedge funds continued to lead

Multi-strategy funds continued to lead the industry in terms of new inflows in May. Investors added an estimated $5.4 billion to the universe during the month, bringing YTD totals to $34.3 billion, or 52% of total hedge fund industry net inflow in 2015.

Large multi-strategy funds (>$1b) have dominated the universe’s inflows in 2015, which in turn means these large funds have accounted for a very large portion of overall hedge fund industry inflows. Large multi-strategy funds have received an estimated 95% of all multi-strategy net inflows in 2015, which translates to nearly 50% of all hedge fund industry net inflow this year.

After a mixed start to 2015, investor flows into equity focused strategies have begun to accelerate. Inflows in May of $7.5 billion were the largest in nearly a year and follow a $5.8 billion allocation in April. While the universe is well below their pace of 2014, recent investor interest is a positive sign.

Hedge Funds Inflows

Managed futures strategies increased in May

After a slowdown in April, investor allocations to managed futures strategies increased in May. The universe took in an estimated $2.0 billion during the month, bringing YTD total inflow to $10.6 billion. YTD 2015 inflows are the highest since 2011 ($11.9 billion through May of that year). However, in the second half of 2011, managed futures inflows were essentially flat as performance was mixed. This is important to note because managed futures funds experienced an elevated performance loss in April and another decline in May. If investor interest shifts negative, then it is more evidence that investor interest in managed futures strategies may be primarily short-term and circumstantial in nature.

Credit strategies continue to accumulate new assets in 2015, however the group’s YTD inflow of $13.6 billion is below the rates seen in each of the prior four years. The group is likely being supported in part from what has been a near record amount of assets “in play” due to redemptions from traditional US fixed income institutional strategies, which saw gross outflows in both Q4 2014 and Q1 2015 at the highest levels since Q4 2008.

Macro hedge funds keep rising

Macro hedge funds enjoyed a fourth consecutive month of positive and rising investor sentiment in May. The $5.1 billion allocated to macro strategies in May was the universe’s largest monthly inflow since February 2013.

Hedge Funds Inflows

Despite positive inflows of $1.2 billion in May, event driven fund flows continue to be below expectations in 2015. The universe lost an estimated $1.1 billion in April, much of it coming out of activist funds. May’s inflows bring YTD allocations only slightly positive for the event driven universe after receiving $42.5 billion in 2014.

After a string of nine consecutive months of net outflows, emerging market hedge fund enjoyed their second consecutive month of inflows in May. Much of the renewed interest appears directed at funds focused on China.

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