HFR: Hedge fund assets reach another record despite down quarter

Hedge fund assets in aggregate received just enough net inflows and investment returns to reach a new industry high of $2.8 trillion as of Sept. 30, data from Hedge Fund Research showed.

Assets were up 0.6% compared to June 30, representing the ninth consecutive quarterly record.

Net inflows in the quarter ended Sept. 30 were $15.9 billion, down 47.9% from the $30.5 billion hedge funds attracted during the previous quarter.

Despite the slow down in growth during the third quarter, net inflows for the nine months ended Sept. 30 were $72.7 billion, compared to $63.7 billion for all of 2013, HFR data illustrated. The year-to-date Sept. 30 net inflows were the highest for the first three quarters of any year since 2007, HFR researchers said in a news release accompanying their inflows report, which was released Monday.

Event-driven strategies attracted a net $11.4 billion in the three months ended Sept. 30, although in aggregate, hedge fund managing the strategy lost a total of $11.1 billion due to performance, the HFR report showed. Relative value strategies brought in a net $11.1 billion of inflows and added $2 billion from performance. Global macro strategies lost $11.1 billion in net inflows, but had the highest performance-related gain in the quarter at $18.3 billion, HFR's report said.

Encompassing all hedge fund strategies, the return of the HFRI Fund Weighted Composite index was -0.9% in the quarter ended Sept. 30, compared to 2% in the second quarter and 1.1% in the first quarter. The index returned 3.1% year-to-date Sept. 30.

Changes in net asset flows are imminent, predicted Kenneth J. Heinz, HFR president, in the news release.

“Global financial markets experienced a significant macroeconomic inflection point in the third quarter, driven by a combination of both expected and unexpected catalysts,” including wider return dispersion between hedge fund strategies, higher trading volumes and higher asset volatility, Mr. Heinz said.

“Investors anticipating and positioning for a continuation of these trends are likely to drive continued industry growth through year end and into early 2015,” he added.