Investors added an estimated $41bn into hedge funds during the month after outflows in December 2013 and light inflows in January 2014. Performance gains added an additional $45.9bn, bringing February’s asset increase to $86.9bn or 3.1% - the industry’s largest asset growth since performance gains drove a large increase in May 2009.
Total industry assets reached $2.93trn in February, only $11.9bn below the all-time peak set in Q2 2008.
Investor preferences for equity over credit strategies persisted for a fourth consecutive month, the longest streak of equity fund dominance since assets began to chase the post-financial crisis equity market recovery.
However, credit strategies showed a significant rebound in investor sentiment in February. Five months after US 10YR rates began to rise sharply in May 2013, investor flows reversed an almost two year-long streak of inflows. In the ensuing four months investors withdrew over $3bn, but February’s inflow more than reversed this.
Investors dipped back into macro strategies in February, with positive flows to the universe for the first month since September 2013. Prior to February and since the end of 2012, investors had removed an estimated $15.8bn from macro funds in the face of mediocre aggregate returns.
Event driven funds continue to be near the top of investors’ preferred hedge fund strategies and have received an estimated $10.3bn in 2014, already surpassing the universe’s estimated inflows for 2013.
Activist funds received about 41% of all event driven strategy inflows in February, receiving an estimated $2.1bn of new capital and bringing 2014 estimated inflows to just over $5bn. Total AuM in funds employing activist strategies reporting to eVestment reached nearly $73bn.