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Net Inflows Holding Up

Report: Systematic Strategies

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Stockholm (HedgeNordic) – Capital flows into global hedge funds returned to a positive trajectory in October after investors pulled out about $8 billion from the industry in September. According eVestment’s latest Hedge Fund Asset Flows Report, hedge funds as a group attracted net inflows of $7.2 billion in October to bring the net inflows for the first ten months of 2021 to $34.3 billion.

Historically, the month of October has not been a great asset raising period for the hedge fund industry, according to eVestment’s Global Head of Research, Peter Laurelli. “You would have to go back to 2010 to find the last October where there were any meaningful net inflows for that month,” says Laurelli, suggesting that the net-inflows figure for October highlights the industry’s asset-raising success for most of 2021. One area of concern is the increasing concentration of large allocations to a select group of managers.

“You would have to go back to 2010 to find the last October where there were any meaningful net inflows for that month.”

Although 53 percent of funds within the eVestment database reported net inflows for October, the portion of funds attracting inflows of more than two percent of their assets under management has been low for a fifth consecutive month. “One area we watch is the concentrations of net flows and it’s here where we’re seeing deviations from themes present at the beginning of the hedge fund industry’s current capital-raising renaissance,” says Peter Laurelli. “The bottom line is success is being felt less broadly than several months ago. And while this may end up being nothing, it’s worth noting.”

“The bottom line is success is being felt less broadly than several months ago. And while this may end up being nothing, it’s worth noting.”

Multi-strategy hedge funds received the highest net inflows in October, with the group receiving a combined $3.0 billion during the month. Multi-strategy vehicles attracted a combined $24.7 billion in net inflows in the first ten months of 2021, following net outflows of $2.4 billion in 2020 and net outflows of $18.3 billion in 2019. This year, the “multi-strategy” group sits in the top spot among the ten eVestment-defined primary strategies in terms of net inflows. “With an additional $3 billion going into multi-strategy funds in October, net inflows for the year are larger than we’ve seen for any strategy for a few years,” writes eVestment.

Source: eVestment.

Managed futures funds continue to attract capital for an eighth consecutive month. The group received an estimated $2.2 billion in net inflows in October to bring the year-to-date figure for net inflows to about $13.1 billion. After two consecutive months of net inflows, flows to long/short equity managers returned to negative territory in October. Investors pulled $1.6 billion from long/short equity strategies in October, extending the 2021 net outflows to $12.6 billion. However, the October redemptions were large and concentrated on a small number of funds, hiding an overall more positive outlook for the segment.

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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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