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Hedge funds’ strong start drives growth

The global hedge fund industry, according to the Eurekahedge Hedge Fund index, returned 5.1% year-to-date through April 30 and added $75 billion to investor accounts in the process. Total assets were estimated at $2.32 trillion, up from $2.29 trillion at the end of 2018. Whether the gains will attract new commitments, however, is yet to be seen. 2019's performance-based growth was partially offset by $48.2 billion in client redemptions, and industry client flows have been a net negative each month since April 2018.

Over the period, total asset growth has been more dependent on client flows than performance-related growth. But clients are more likely to be attracted to the asset class should it prove to offer better returns in exchange for higher fees. Investors have been paying attention to returns though, as strong three-month return periods show positive correlation to positive monthly net flows.