Hedge fund assets rose 8.3% in 2014 to reach $2.85 trillion, a new industry high, a Hedge Fund Research analysis showed.
Over the last decade, hedge fund assets rose 163.6%, up from $1.11 trillion as of Dec. 31, 2005, industry tracker HFR said in its 2014 year-end report released Tuesday.
Net hedge fund inflows were $76.4 billion in the 12 months ended Dec. 31, the highest annual total since $194.5 billion of net inflows in 2007. Total net inflows in 2014 were up 19.9% over the prior year.
HFR analysis showed that in addition to inflows, hedge fund assets also were propelled to the new industry record by $140.3 billion of performance gains in 2014.
Asset growth by strategy in 2014 was led by relative value with a total of $75.2 billion, of which $45.5 billion was from net inflows and $29.7 billion from investment gains. Event-driven strategies totaled $56.2 billion for the same period, with $32.1 billion from net inflows and $24.1 billion from returns, followed by equity hedge at $54.6 billion, with net inflow, $26.8 billion and returns of $27.8 billion; and global macro with $30.8 billion, with net outflows of $28 billion and returns of $58.8 billion.
“Many hedge funds had maintained conservative positioning throughout 2014, opportunistically anticipating the macroeconomic turmoil which accelerated into year-end,” said Kenneth J. Heinz, HFR’s president, in the report.
Mr. Heinz went on to note that hedge fund managers expect a “sustained equity market correction” and “in light of this, many global investors have increased and rotated their hedge fund portfolio exposures” to take advantage of and gain protection from volatile markets heading into 2015.