- Advertisement -
- Advertisement -

Hedge Fund Assets Regain Ground

- Advertisement -

Stockholm (HedgeNordic) – The hedge fund industry is bigger than ever as assets under management reached a record $3.6 trillion at the end of 2020, according to Hedge Fund Research (HFR). Total hedge fund capital increased by $290 billion quarter-over-quarter, representing the largest quarterly asset growth in industry history as reported by HFR. Performance-based asset gains, rather than new inflows from investors, accounted for most of the industry’s asset growth.

In a webinar last week, Kenneth J. Heinz, President of HFR, lauded 2020 as “one of the most impressive years in the history of the industry, if not the most impressive.” According to HFR, investors added an estimated $16 billion to the hedge fund industry during the second half of 2020 after net asset inflows of $3 billion in the fourth quarter. Total net outflows from the hedge fund industry totaled $12.2 billion in the second quarter, whereas first-quarter net outflows reached $33.3 billion. “Investors allocated new capital to hedge funds in 4Q 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,” stated Kenneth Heinz.

“One of the most impressive years in the history of the industry, if not the most impressive.”

According to Heinz, “hedge fund strategies which have demonstrated powerful, opportunistic and uncorrelated performance throughout 2020 are likely to lead continued industry growth into 2021.” HFR data also shows that investors put more money into the industry’s biggest managers than they took out in the fourth quarter, whereas smaller firms reported net outflows during the period. Hedge fund firms managing more than $5 billion received an estimated $4.8 billion in net inflows during the last three months of 2020, while firms managing less than $1 billion experienced net outflows of $1.3 billion. Mid-sized firms managing between $1 billion and $5 billion as a group recorded net outflows of $436 million during the fourth quarter.

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

eVestment: Hedge Funds See Net Outflows 

Contrary to data by HFR, data compiled by data provider eVestment shows that investors removed an estimated $9.1 billion from hedge funds in the final quarter of 2020 after estimated net outflows of $9.7 billion in the final month of the year. For the entire 2020, investors pulled an estimated $58.8 billion from the hedge fund industry, down from the $102.3 billion investors pulled from hedge funds in 2019. The $9.7 billion in net outflows in December represents “a decent figure for the industry,” according to eVestment Global Head of Research, Peter Laurelli. Since 2009, investors pulled out an average $16.5 billion from the industry during the month of December.

“Combined with the hedge fund business’ strong performance in 2020 and investors’ continued interest in diversifying their portfolios with alternatives, hedge funds are ending 2020 and going into 2021 on some strong notes.”

“Combined with the hedge fund business’ strong performance in 2020 and investors’ continued interest in diversifying their portfolios with alternatives, hedge funds are ending 2020 and going into 2021 on some strong notes,” writes eVestment. The hedge fund industry ended the year with $3.359 trillion under management, according to eVestment.

Photo by Gilly on Unsplash

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

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

Latest Articles

Leveraging Opportunities in Credit Markets

Stockholm (HedgeNordic) – After several years of successful bond investing through a private investment company, Nicolai Wenckheim launched an alternative investment fund in March...

ATP’s Response to Changing Equity-Bond Correlations

Stockholm (HedgeNordic) – In 2022, the usual negative correlation between equities and bonds, essential for the construction of diversified portfolios, disappeared. This rare anomaly,...

Evolution in Hedge Fund Investing with LGT Collaboration

Stockholm (HedgeNordic) – Since Peter Ragnarsson assumed the role of Head of Alternatives at PRI Pensionsgaranti in 2015, the Swedish pension insurer has significantly...

Borea Expands Sustainability Focus with New Hire

Stockholm (HedgeNordic) – Norwegian fund boutique Borea Asset Management has expanded its management team with the hiring of Iselin Ahmer Solberg as a corporate...

Schroders Strengthens Nordic Client Team

Stockholm (HedgeNordic) – Schroders is expanding its client relationship capabilities in the Nordics with the appointment of Ludvig Löfving as a Client Director. He...

The Lynx Constellation Is Brightening Up

Stockholm (HedgeNordic) – Lynx Asset Management made headlines in late 2019 with the launch of its pure-play machine learning strategy, Constellation, as a standalone...

Allocator Interviews

Latest Articles

Man Institute Insights

Voices

Request for Proposal

- Advertisement -