© Reuters. FILE PHOTO: A representations of cryptocurrencies on this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration/File Picture
By Nell Mackenzie
LONDON (Reuters) – Development-following and area of interest hedge funds that commerce crypto currencies and insurance-linked belongings attracted most new investor cash within the first three quarters of 2023, in keeping with a world report by analysis agency Preqin on Wednesday.
Hedge funds making use of algorithms to catch market developments, or commodity buying and selling advisors noticed $13.1 billion of internet money inflows, Preqin mentioned.
Area of interest methods, which make up 2% of the trade (by belongings), noticed a internet $11 billion in inflows throughout the identical timeframe, mentioned Preqin.
The worldwide hedge fund trade as an entire solely noticed a couple of 5% rise in AUM throughout all methods, the report mentioned.
A number of totally different sorts of hedge funds suffered declines in AUM throughout this time, mentioned Preqin, together with inventory buying and selling methods with a internet $15 billion of outflows. Occasion pushed methods, which earn money on firm debt and M&A offers, noticed internet outflows of $11 billion.
“Investors are quicker to redeem assets in down markets than they are to commit to hedge funds during rising markets,” mentioned the report.
The final 5 years noticed extra money leaving than going into hedge funds in 12 out of 20 quarters, mentioned the report.
Probably the most buyer outflows from the previous 5 years occurred between late 2018 and the second quarter of 2020, when clients took a internet $205.6 billion out of hedge funds throughout seven consecutive quarters.
General underperformance of hedge funds in contrast with public markets throughout this time seemingly performed a job in lots of institutional allocators decreasing their hedge funds exposures, mentioned the report.
