Investors allocated an estimated +$14.12 billion in new money to hedge funds in January, marking the industry’s best start to a year since before the financial crisis of 2008. Those new funds pushed overall hedge fund industry AUM to a new record of $3.366 trillion in January, according to the just-released January 2018 eVestment Hedge Fund Asset Flows Report.
Among primary strategies in January, Macro funds were big winners, with AUM up +$6.87 billion for the month. Long/Short Equity and Directional Credit strategies were also winners among primary strategies in January, with AUM up +$4.16 billion and +$3.62 billion for the month.
On the other hand, Multi-Strategy funds and Event Driven funds saw AUM fall -$3.34 billion and -$1.73 billion respectively in January.
Other interesting points from the new report include:
- Equity strategies continued to receive new allocations, with a preference for global exposure over the U.S. exposure, and developed markets exposure over emerging markets. The trends in emerging markets may be surprising given their outsized returns in 2017, but may be an indication of profit taking or portfolio rebalancing among some investors.
- China-focused funds received among the largest new allocations and largest redemptions to begin 2018. Investors appear less enamored by equity exposure to the country and allocations were concentrated within Chinese debt-focused strategies.
- The debt/equity theme among emerging markets extends beyond China. Of the products with the five largest net inflows in January four were debt focused. The reverse was true for those experiencing the largest outflows.
- The U.S. as a targeted investment region continues to see negative investor sentiment. Products targeting U.S. markets have seen a slow but steady deterioration of their asset base from redemptions. While there is a small handful of very successful quantitative equity strategies receiving new allocations, there are many long/short equity and event driven funds which have seen outflows.
To download a full copy of the report, please click here.