Record high for hedge fund assets

The third quarter of 2017 proved a big one

Record high for hedge fund assets
Steve Randall
Total hedge fund industry capital reached a record U$3.15 trillion in the third quarter of 2017.

The fifth consecutive quarterly record was reached as global economic growth prospects improved despite the increasing threat from geopolitics, a report from Hedge Fund Research reveals.

The third quarter’s record was $50 billion above the second quarter of 2017.

Net investor inflow slowed to $1.7 billion but remained positive. Year to date inflow of $2.5 billion, while subdued, is a turnaround from 2016 when there was a net investor outflow of $70 billion.

“The hedge fund industry continued the powerful process of performance, growth, expansion and evolution which has defined recent quarters, including investor-friendly trends toward lower fees and improved liquidity, as well as the proliferation of regulated vehicles and alternative beta strategies,” commented Kenneth J. Heinz, President of HFR.

The picture was rosier for small and large funds, while those in the middle saw higher outflows.

Firms managing greater than $5 billion received an estimated $1.2 billion in the third quarter, and those managing less than $1 billion collectively experienced inflows of $1.2 billion. Those firms managing between $1 and $5 billion experienced a small outflow of $700 million.

Heinz believes the outlook for hedge funds is positive heading into 2018.

“Following eighteen months of strong equity market and hedge fund performance, many institutions and investors continue to explore the increased use of alternatives and alternative beta as mechanisms to insulate portfolios from potential market corrections and to increase the likelihood of achieving their required returns. We expect these trends to continue through year-end, driving industry growth into 2018,” he said.