Hedge Fund Flows Rebound After Miserable 2016
The industry is achieving higher performance — with a few outliers even reporting three-digit returns — and investors are coming back.
The tide may be turning for hedge fund managers.
After experiencing their worst year of redemptions since the financial crisis, hedge fund managers have seen an upswing in flows since the beginning of 2017, according to industry reports.
Research released by eVestment this week showed that investors poured $15.8 billion into hedge funds in March, for quarterly net inflows of $21.9 billion. A similar report published by HFR on Wednesday found that flows had not quite turned positive yet – but it noted that redemptions were at their lowest since the end of 2015.
Recent positive performance may have renewed investor interest, according to eVestment, which reported average returns of about 8.5 percent for the 12 months ending in March. This combination of higher returns and fewer redemptions led industry assets to increase to roughly $3.1 trillion.
“Sophisticated investors continue to strategically position for market trends that drive hedge fund performance,” said HFR president Kenneth Heinz in his firm’s report, citing the increased possibility of geopolitical conflicts as one such factor.
However, the industry-wide performance improvements may just be driven by a handful of high achievers. In its own report released Thursday, Preqin identified two hedge fund managers that more than doubled their investments over the past 12 months.
These outliers — Rosalind Advisors and Adaws Capital — all reported returns upwards of 108 percent for at least one fund. Two Rosalind funds, Rosalind Offshore Fund and Rosalind Capital Partners, earned more than 125 percent each with their event-driven strategies.
Other top performers included Spartan Fund Management — whose long-short equity fund, Teraz Fund, returned 99 percent since March 2016 — and Global Advisors, which earned 97.2 percent through its Bitcoin Investment Fund.
Hong Kong-based Serica Partners Asia had the best-performing credit fund, with its Serica Credit Balanced Fund earning 32.61 percent over the past 12 months. Meanwhile, Alpha Z Advisors dominated the CTA category with its Alpha Z Futures Fund, which gained 71.3 percent.
Note: Due to an error in a Preqin report detailing investment performance for S Squared’s long-short equity fund, Leaf Investment Partners, an earlier version of this story contained incorrect performance information for the fund. That fund has returned 19.35 percent over the past 12 months.