Hedge funds set records, but flows cool off

Record highs in stock markets are being paced by hedge funds, whose assets set a new milestone for growth in June, according to latest data.

After surpassing an all-time peak for assets under management in April, then reaching $3 trillion in May, new flows and performance again lifted assets in June to $3.032 trillion (€2.2 trillion), according to eVestment data.

However, the $6.1 billion added in June was the lowest total since January and marks the end of a four-month span of elevated inflows that averaged over $22 billion per month.

The industry’s growth rate in the first half of the year is on an annualised pace of 7.1%, its highest post-financial-crisis rate and its best start since 2007.

Event-driven strategies took in the largest pile of money in the second quarter with $15.5 billion in new assets. Activist strategies received over $6 billion.

Investors believe there is an opportunity in European credit and equity markets, allocating $5.3 billion in June and $9 billion in the second quarter, says eVestment.

Performance has been key for macro strategies fund flows. In Q2, investors actively allocated to those returning over 5% in the prior 12 months, while redeeming from those returning less than 5%.

A Reuters poll of 61 fund managers, traders and strategists in June found the majority gave the FTSE 100 a median end-2014 target of 7,000 points. The Dow Jones and S&P 500 this month saw consecutive days of record highs. The Dow topped 17,000 points for the first time.

©2014 funds europe

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