Hedge fund industry assets rose 1.1% in the three months and 2.7% in the six months ended June 30 to $3.1 trillion, new data from Hedge Fund Research showed.
Net inflows were $6.7 billion in the second quarter in contrast to each of the previous six quarters when the hedge fund industry experienced aggregate outflows. Net outflows were $5.5 billion in the quarter ended March 31, for example, HFR data showed.
Net inflows were a modest $1.2 billion in the first six months this year, compared to net outflows of $23.5 billion in the six months ended June 30, 2016. Full-year net outflows were $70.2 billion in 2016 , according to HFR's most recent hedge fund report.
In the quarter ended June 30, industry assets, including net inflows, were boosted by industrywide performance gains of $27.4 billion.
By HFR hedge fund category, equity hedge fund strategies had the highest investment gains — $19.3 billion — and $3.8 billion in net inflows; event-driven strategies produced $10 billion of investment gains but experienced $3.9 billion in net outflows; macro funds attracted $5.2 billion of net inflows but suffered $5.2 billion in investment losses; and relative-value vehicles achieved $3.3 billion of investment gains and $1.6 billion of net inflows.
"Investors increased their allocations to hedge funds in (the second quarter) … with a strategic emphasis on non-directional and equity beta-reducing exposures, credit and multistrategy sectors that offer protection against rising rates, and larger, well-established fund managers," said Kenneth J. Heinz, HFR's president, in the report.
"Allocation trends reflect the forward-looking nature of investors, focusing on quantitative and trend-following strategies, despite these not being top-performing areas, as well as on equity and fixed income beta-reducing exposures. It is likely that funds which have and continue to navigate this low-volatility environment, and which tactically position for surprise surges in volatility, will lead industry growth in (the second half of 2017)," Mr. Heinz added.