After outflows in December in and weak inflows in January, investors allocated more to hedge funds last month than in any month since eVestment started tracking monthly flows in October 2008, though quarterly data implies that there were higher inflows in mid-2007. Hedge funds gained $41 billion from inflows and another $45.9 billion from performance for a total 3.1% increase in assets under management (AUM). According to a March 19 eVestment report, total industry assets are now at $2.93 trillion, quickly approaching the all-time peak reached in mid-2008.
Hedge funds that outperformed in 2H13 were rewarded in February, receiving 63% of the month’s inflows, while activist funds gained $2.1 billion in new capital (41% of event driven fund inflows).
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
Equity strategies still most popular with hedge funds
Credit/fixed income strategies rebounded in February, gaining $11.2 billion after months of outflows caused by rising US 10 year rates, but there was still a strong preference for equity strategies which gained $18.2 billion from inflows. Multi-asset strategies gained $11.5 billion while commodities lost $450 million. Event driven funds were among the most popular choices in February pulling in $5 billion and $10.3 billion so far this year, already surpassing the 2013 total.
Managed futures had $1.2 billion worth of inflows in February, but is still down $3.4 billion for the year. Similarly, MBS strategies were up $690 million in February but are still down $340 million so far this year. Investors returned to macro strategies after four months of outflows and a total $15.8 billion in outflows since the end of 2012, but the nearly $5 billion in inflows wasn’t quite enough to wipe out losses from January and macro strategies are still down $860 million for the year.
North America was the most popular regional mandate, with $6.7 billion in inflows, followed by Europe with $5.7 billion, emerging markets with $1.1 billion, and Asia with $590 million in inflows. While emerging markets didn’t have net outflows, inflows had been low in December and January, but eVestment reports that interest especially rebounded in Latin America and Eastern Europe.
Commodity strategies change gears
Hedge fund aggregate performance was 1.87% in February, compared to 4.57% returns for the S&P 500, led by equity strategies (2.28%) and commodities (2.13%). While equity strategies have been outperforming other hedge fund strategies on the back of the ongoing bull market, this is a significant reversal for commodity strategies which had the worst 2013 performance. Only FX strategies fell behind last month, losing 0.68%.