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Hedge Fund Assets Grow for Third Consecutive Quarter

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Stockholm (HedgeNordic) – The global hedge fund industry’s assets under management continued to grow for the third consecutive quarter in the three months ending June, following two quarters of net inflows. According to Hedge Fund Research, the industry’s assets under management reached an estimated $3.95 trillion, a quarterly increase of over $60 billion that reflects $3.6 billion in new capital and additional gains from performance.

“Investors allocated new capital to hedge funds in 2Q, extending gains from 1Q despite a total reversal of investor risk tolerance from the risk off dominated environment that concluded 1Q to a strong risk on sentiment, driving performance and attracting investor capital to end the first half of 2023,” comments Kenneth J. Heinz, President of HFR. “Hedge funds have navigated this powerful shift in risk tolerance and sentiment,” he emphasizes. “Once again, strategies which have demonstrated their ability to navigate this shift in risk sentiment and evolving, forward-looking risks are likely to attract capital from leading global financial institutions seeking to opportunistically position their portfolios while also preserving capital, with these driving industry growth into 2H 2023.”

“Investors allocated new capital to hedge funds in 2Q, extending gains from 1Q despite a total reversal of investor risk tolerance from the risk off dominated environment that concluded 1Q to a strong risk on sentiment…”

HFR’s latest Global Hedge Fund Industry Report reveals that investors allocated an estimated $3.6 billion in new capital to the hedge fund industry in the second quarter, with inflows led by equity strategies. This marks the second consecutive quarter of net asset inflows for the industry. Equity Hedge (EH) led all of HFR’s strategy categories in both capital inflows and performance-based gains in the second quarter. The capital managed by this segment of the industry increased by an estimated $29.4 billion, reaching $1.14 trillion at the end of the second quarter. Performance-based gains were complimented by an estimated $2.8 billion of new investor capital during the quarter.

The second-quarter inflows were primarily directed towards the industry’s largest firms, with those managing over $5 billion experiencing an estimated net inflow of $6.5 billion. Firms managing between $1 billion and $5 billion saw an estimated net outflow of $366 million during the quarter, while smaller firms managing less than $1 billion experienced net outflows of $2.56 billion.

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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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