Hedge fund industry assets just barely hit a peak of $2.972 trillion as of Sept. 30, topping the prior high-water mark on June 30, 2015, by a scant 0.1%.
Strong performance fueled the 2.6% growth in hedge fund assets in the quarter, reported industry tracker Hedge Fund Research in data released Thursday.
Net outflows of $28.2 billion — the largest quarterly outflow since the second quarter of 2009 — were offset by net performance-related growth of $101.5 billion. Hedge fund net flows were negative in the past four quarters, the longest streak of outflows since the third quarter of 2008 through the second quarter of 2009. Year-to-date through Sept. 30, net outflows totaled $51.4 billion, HFR reported.
HFR's four major hedge fund strategy categories all posted positive investment gains in the three months ended Sept. 30, with equity hedge at $37.1 billion; event-driven, $34.8 billion; relative value, $23.6 billion; and macro, $6.3 billion.
By contrast, macro was the only strategy bucket to experience positive net inflows, at $800 million. Net outflows for other strategies were event-driven, $15.5 billion; equity hedge, $9.4 billion; and relative value, $4.1 billion.
The industry's largest hedge fund managers suffered the highest net outflows in the most recent quarter with firms managing more than $5 billion experiencing about $22 billion in outflows, while firms running between $1 billion and $5 billion had collective net outflows of $7.4 billion. HFR researchers found that most hedge fund shops managing less than $1 billion had small net inflows.
“Total hedge fund industry capital … reached a record high as the U.S. economy prepares to conclude an extended interest rate cycle,” said Kenneth J. Heinz, HFR president, in a news release accompany the latest data release, adding that “as rates are allowed to normalize, fundamental mean reversion across many specialized long/short strategies is likely to drive strong performance and industry growth into 2017.”