Hedge Fund AUM Tops $3 Trillion For First Time

Hedge funds continue to grow in popularity among global investors. According to a new report from eVestment, strong inflows and returns pushed total hedge fund assets under management above $3 trillion for the first time ever in May 2014. the total of $3,001.77 trillion just edges past the prior all-time high set in the second quarter of 2008.

Hedge funds see strong  inflows this month

Hedge funds once again saw strong allocations in May. According to eVestment’s Hedge Fund Asset Flows, May was the fourth consecutive month of to see high hedge fund inflows. The more than $22 billion of new funds takes year-to-date flows to above $93.3 billion, the biggest five month total to begin a year stretching back to 2007.

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Strong performance gains

Hedge Funds

The eVestment report also highlighted strong performance gains for hedge funds for the month. “Performance gains added $37.8 billion to total AUM for an estimated asset weighted return of 1.28% in May, well above the 1.00% the industry produced on an equal weighted basis during the month. For the first five months of 2014, equal and asset weighted returns are nearly identical, both just below 2.00%.”

Alternative equity exposure continues to grow

Allocations to to equity exposure continued to increase in May, a trend now in place for 11 consecutive months. The new $11.5 billion inflow to equity strategies during the month brings YTD inflows to just above $59.4 billion, the most investor interest in equity hedge fund exposure over a five-month span since mid-2007.

Event-driven strategy funds saw positive inflows

The report also pointed out that allocations to event driven strategy hedge funds grew in May. The $6.4 billion of new money takes total event-driven allocations to $31.1 billion so far in 2014. Of note, activist strategies represent 70% of event driven fund inflows reported in the month, indicating the sector took in somewhat over $4 billion in May.

Managed futures strategies still lagging

Managed futures strategies remain a laggard. This sector has simply not yet seen the return of positive investor interest that most macro strategies have enjoyed. The managed futures strategies sector suffered their ninth consecutive month of outflows in May, and the twentieth month of net redemptions out of the last twenty-one.