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First Quarterly Inflows Since 2018

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Stockholm (HedgeNordic) – Hedge funds registered net inflows for the first time since the first quarter of 2018, according to a report released by Hedge Fund Research last week. Macro strategies led the hedge fund industry’s estimated net inflows of $13.0 billion in the third quarter, which brought the industry’s assets under management to $3.31 trillion.

“Investors allocated new capital to hedge funds in 3Q as a result of both defensive outperformance through the coronavirus-driven volatility in early 2020, as well as opportunistic gains through the uneven financial market recovery in the second and third quarters,” Kenneth J. Heinz (pictured), President of HFR, stated in last week’s report. “Hedge fund strategies which have demonstrated powerful, opportunistic and uncorrelated performance throughout 2020 are likely to lead continued industry growth into 2021.”

“Hedge fund strategies which have demonstrated powerful, opportunistic and uncorrelated performance throughout 2020 are likely to lead continued industry growth into 2021.”

Macro strategies led last quarter’s positive net flows to the hedge fund industry, with investors allocating an estimated $7.2 billion to this strategy group. The volume of net inflows was nearly equally split between CTA strategies and uncorrelated currency strategies. Quantitative-driven trend-following CTA strategies received net inflows of $3.2 billion during the third quarter, while currency-focused strategies received inflows of $3.1 billion. The broader macro strategy category had $579 billion in assets under management at the end of the third quarter, according to HFR. Fixed income-based relative value arbitrage strategies, meanwhile, attracted an estimated $5.5 billion in net inflows during the third quarter, increasing the group’s total capital to $903 billion.

According to HFR, last quarter’s inflows were mainly led by the hedge fund industry’s largest firms. Hedge fund firms managing more than $5 billion received an estimated $11.2 billion in net inflows during the three months that ended September, while firms managing less than $1 billion attracted net inflows of $2.6 billion. Mid-sized firms managing between $1 billion and $5 billion as a group recorded net outflows of $810 million during the third quarter.

“Institutions globally are making forward-looking allocations to hedge funds, anticipating and positioning for the near-term uncertainties of both the virus and the US election, as well as intermediate-term macroeconomic uncertainties of the US, European and Asian economies into 2021,” said Heinz.

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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