Alternative Investment

Hedge funds on track to outperform 2020 as continued capital inflows boost industry coffers

Strong strategy gains have been renewing investor faith in the sector, with allocator’s flows swelling an extra $12.01 billion into hedge funds during May. Those inflows have brought year-to-date new capital to $39.12 billion, this increase has totaled industry assets under management to $3.57 trillion as of the end of May. This article in Hedgeweek covers the total hedge funds gains and the factors contributing to the boost of industry coffers to almost $3.6 trillion in the run-up to 2021’s midway point.

Recent research published by eVestment shows hedge funds overall gained 1.48% on average during May. This has helped drive 2021’s year-to-date returns to 9.05%. Research shows the second half of the year is in great condition with hedge funds’ full-year returns for 2020 finishing at some 11.05%.

From the two-thirds of hedge funds reporting to eVestment May of 2021, their numbers on record have been the highest percentage seeing net inflows since May 2016.

Multi-strategy hedge funds have attracted the strongest interest in 2021, with investors pledging $4.49 billion in May, bringing net inflows total this year to more than $20 billion. Macro funds have brought in $3.48 billion last month, bringing year-to-date inflows to $5.62 billion. Macro managers were May’s best performers on a monthly basis showing January-to-May of 2021 returns at 5%. 

On the other side investors drew $1.19 billion out of long/short equity strategies during May, Peter Laurelli, eVestment’s global head of research describes as the “one major outlier”. The $9.40 billion pulled out from long/short equity hedge funds is staying concentrated among underperformers, the long/short equity hedge fund universe is still remaining positive. 

For more information about the wide-margin performance can mean for hedge funds towards the second half of 2021, read the article linked above and contact Steve Vlasak.