Hedge funds achieve record AUM despite outflows

record hedge fund AUMHedge fund assets increased to a record level in the most recent quarter despite redemptions from some of the main strategies.

Assets under management reached $3.24 trillion at the end of the third quarter, driven by a $8.4 billion increase due to performance.

According to data from HFR, this increase occurred despite ongoing redemptions from macro, event-driven, and relative value strategies. Equity hedge strategies also experienced “small outflows”, HFR said last week.

The industry had seen $3.1 billion net outflows in the second quarter and then an estimated $9.1 billion of outflows through the third quarter.

For the year, investors have redeemed an estimated $11.1 billion of hedge fund industry capital, though total hedge fund assets have increased by $34.4 billion.

The HFRI Fund Weighted Composite Index gained 0.55% in the latest quarter. There was strong performance from technology and event-driven strategies.

“Total hedge fund capital increased to a record despite a modest investor outflow as US financial markets began [the fourth quarter] near an inflection point in interest rates, economic growth and equity market valuation,” said Kenneth J. Heinz, president of HFR. “Critical drivers of investor allocation trends have expanded from performance and asset under management to also include an intense focus on fees, liquidity, firm management, European credit risk, social responsibility, and interest rate risk factor sensitivities. Funds which are able to position for and navigate this shifting transitional inflection point in financial markets are likely to lead industry performance and growth into 2019.”

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