Despite Poor Performance, Hedge Fund Inflows Near 2007 Record

The hedge fund industry recorded a gain of $4.4 billion bringing the total assets under management (AUM) to $1.91 trillion in September as global markets experienced momentum. During the month, hedge fund managers gained $3 billion, which provided positive impact to the industry’s total AUM.

Hedge Fund Sept. Total AUM

MSCI World Index gained

The MSCI World Index gained climbed by 3.87% while the Eurekahedge Index gained 1.18% in September. The upside was driven by the decision of the Federal Reserve to continue the current level of its bond-buying program, and the prevention of a possible war in the Middle East, particularly the planned U.S. military strike against Syria, according to the latest report from Eurekahedge.

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The report indicated that the net asset flows for 2013 reached the highest level in five years, coming in at $95.3 billion, which was similar to the amount recorded during the period prior to the financial crisis. The strong assets flows showed that investors have positive sentiment towards the hedge fund industry.

Asian hedge funds outperform

According to the report, Asian hedge funds excluding those in Japan outperformed the underlying markets by more than 8% year-to-date in September. Asian hedge funds achieved $10 billion gain via net positive outflows.

During the month, Japan focused hedge funds started attracting capitals and allocations, and it was the fourth consecutive month of net positive asset outflows. Investors seeking to invest in the country generally allocated capital in traditional investments or in hedge funds that are investing in broad geographic mandates including Japan. Hedge funds that invested in Japan only lost $4 billion from June 2012 to May 2013 through net negative asset flows. However, Eurekahedge noted that the trends over the past few months seemed to turnaround.

European hedge funds asset flows

European hedge funds achieved the strongest asset flows from investors with $1.8 billion in September, which is the tenth consecutive month of asset allocations. The hedge fund industry’s assets in the region climbed to $37 billion through allocations alone since the start of the year. The momentum indicates that investors are becoming more confident with the recovery of the economy in Europe. The Eurekahedge European Hedge Fud Index gained 5% in 2013 and the total AUM was $414.7 billion for the month.

In North America, hedge fund managers generated the best results gaining as much as 12.9% year-to-date in September. Their best performing strategy is investing in distressed debt this year.  The Eurekahedge Distressed Debt Hedge Fund Index climbed 10.79% year-to-date in September, the highest among the different strategies.

Best Strategy Distressed Debt Investing