Investors Allocated Heavily To Hedge Funds In March And Q1 2015 by eVestment

Total hedge fund assets increased 0.35% in March of 2015 bringing the industry’s total assets under management to $3.101 trillion. Investors added an estimated $15.6 billion of new capital to the industry in March, while performance reduced AUM by an estimated $5.2 billion.

Investor flows have historically been weak in March as early year allocations tend to arrive in February, however March 2015 inflows were well above the last five-year March average of $5.3 billion.

Hedge Funds

With March’s $15.6 billion inflow, investors added an estimated $28.2 billion into the hedge fund industry in Q1. The inflow is below the level seen in Q1 2014 ($51.5 billion) and below the average Q1 inflows of each year since the financial crisis ($30.0 billion), but still a strong indication of investor interest in the industry.

Multi-strategy hedge funds see $9.4 billion of asset inflows

Multi-strategy hedge funds continued to attract a large amount of new assets in March and Q1 2015. Investors added an estimated $9.4 billion to the multi-strategy universe in March, bringing Q1 totals to $20.4 billion. The inflow is slightly above Q1 2014 and well above the last five year Q1 average inflow. Multi-strategy funds took in an estimated $44.4 billion in 2014.

Managed futures funds continue to enjoy strong investor interest in March. After bleeding assets since the H2 2012, the group has enjoyed a solid three-month inflow streak ending with $5.8 billion of new assets in March and $10.0 billion in Q1 2015. Managed futures inflows in Q1 were the group’s first positive quarter since Q1 2012 and their largest quarterly inflow since Q2 2008.

Investors in managed futures funds continued to show preferences for larger funds in March, a trend in place during the current three-month surge of investor interest. In March, funds with the ten largest monthly inflows had an average AUM of $3.4 billion and accounted for 77% of the group’s positive flows during the month.

Hedge Funds

Macro hedge fund flows appear to have turned a corner after eight consecutive months of redemptions ending in February. February inflows were only slightly positive, but the $1.7 billion added in March is a positive sign and step in the right direction.

Long/short equity hedge funds remain positive

Long/short equity fund flows were positive during the month at $2.9 billion. But the jump in inflows seen in February did not fully carry over into March, resulting in Q1 2015 flows being only slightly positive, $840 million. It is a noteworthy to see two consecutive months of positive allocations to the universe, which hadn’t occurred since August 2014.

Credit fund flows have been more positive than equity funds in 2015, but inconsistent. The universe had outflows of $2.3 billion in March, however February’s inflows of $4.4 billion have kept the group’s Q1 flows positive at $2.9 billion. This figure is well below the last five-year Q1 average inflow of $16.7 billion.

Event driven fund flows were negative in March at $2.2 billion. The outflow marks the third month of redemptions in the last four for the universe. Activist fund flows were virtually flat in March and the event driven subset attracted an estimated $1.1 billion of new capital in Q1 2015, despite the broad event driven group seeing outflows of $1.4 billion in the quarter.

Investors continued to sell their commodity hedge fund exposure in March with outflows at $1.2 billion, which brings Q1 2015 outflows to $1.5 billion. March was the sixth month of redemptions from commodity funds in the last eight.