Hedge funds had their best year for inflows globally in 2014 since 2007 when the wheels started to fall off alternative investing as an asset grouping. But net redemptions in the month of December took the shine off the results.
According to the latest quarterly hedge fund report from data provider eVestment, the total inflow into hedge funds around the world was US$98.2 billion, taking the asset class to a record $3.04 trillion – a milestone it had actually reached earlier last year.
But hedge fund assets fell 6.1 per cent in December, with withdrawals of $13.2 billion for the month pushing quarterly net flows to a negative $8.4 billion. This was the industry’s first negative quarter for inflows since the fourth quarter of 2012. eVestment believes, however, that the December experience was seasonal, as it has also occurred in the previous three Decembers.
The annual net inflow compared with $61.7 billion in 2013 and $24.9 billion in 2012.
Virtually all of the net inflows to hedge funds came in the first half of the year, raising concerns that the net flat figures of the second half may reflect investor uncertainty about hedge fund investment performance during a period of higher market volatility.
The two strategies which received the best inflows during the first half – multi-strategy and equity long/short – also had the most redemptions in the December quarter.