Hedge fund assets grew 16.7% to reach a record high — $2.6 trillion — as of Dec. 31, according to research from industry tracker Hedge Fund Research.
Net inflows invested in hedge funds globally in 2013 totaled $63.7 billion. Strong investment returns of about $312 billion worldwide helped raise industry assets by a total of $376 billion, said HFR researchers in their year-end report, released Tuesday.
The HFRI Fund Weighted Composite index returned 9.2% in 2013, the best calendar-year performance since 2010, according to an HFR news release accompanying the report.
Event-driven hedge funds attracted the most net inflow among strategies, with $29.5 billion invested in 2013. Of that total net inflow, $15.4 billion went into special situations substrategy funds; distressed/restructuring, $6.7 billion; and activist, $5.2 billion; with the balance going into other event-driven substrategies.
With an additional $110 billion of investment gains, the event-driven category rose $140 billion to end 2013 with $698 billion. The HFRI Event Driven index was up 12.5% in 2013, the index's best annual performance since 2009.
“The powerful increase in investor risk tolerance drove strong capital flows into hedge funds,” said Kenneth J. Heinz, HFRI's president, in the news release.
“Hedge fund industry growth has continued to a record level of assets despite the challenges presented by a transitional regulatory environment, strong gains in traditional equities and uncertain macroeconomic and political environments in 2013,” Mr. Heinz added.