Key Takeaways
- • Global hedge fund assets under management reached a record US$2.03 trillion as of March 2014, driven by US$15 billion in performance-based gains and US$11 billion in net asset inflows during the month.
- • Hedge funds delivered their strongest 12-month performance at +1.79%, with long/short equity strategies recording their 15th consecutive month of positive net asset flows totaling US$19.0 billion for 2014 year-to-date.
- • North American hedge fund assets hit a new high of US$1.36 trillion, growing by US$11.1 billion in the first two months of 2014, signaling robust regional momentum.
- • Trend following strategies faced continued headwinds, posting their ninth consecutive month of net outflows with redemptions of US$12.7 billion in February, indicating investor rotation away from this strategy.
- • Distressed debt hedge funds demonstrated resilience with eight consecutive months of positive returns, posting +2.25% gains in February and +3.37% year-to-date, while Latin America-focused funds outperformed their benchmark by over 6% on a year-to-date basis.
Summary
The global hedge fund industry reached an inflection point in March 2014, with total assets under management climbing to US$2.03 trillion—a record high at that time. According to the Eurekahedge Report, this milestone was driven by robust performance and sustained investor confidence, with funds generating US$15 billion in performance-based gains and recording net asset inflows of US$11 billion during the month alone. The 12-month performance of +1.79% represents the hedge fund industry's strongest showing over that period, signaling recovery and renewed optimism among institutional capital allocators.
Strategy-level performance divergence was pronounced. Long/short equity hedge funds emerged as the clear beneficiary of investor appetite, posting their 15th consecutive month of positive net asset flows with cumulative 2014 allocations reaching US$19.0 billion. In contrast, trend following strategies continued to face structural headwinds, recording their ninth consecutive month of net redemptions in February with outflows totaling US$12.7 billion over that period. This divergence reflects a broader market rotation toward value-oriented and event-driven strategies over passive, systematic trend-following approaches during this period.
North American hedge funds demonstrated particularly strong momentum, reaching a new high of US$1.36 trillion in assets and adding US$11.1 billion in the first two months of 2014. Specialized strategies showed mixed results: distressed debt investing funds delivered their eighth consecutive month of positive returns, gaining 2.25% in February and 3.37% year-to-date, reflecting strong credit markets and M&A activity. Japan-focused hedge funds recorded their second consecutive month of negative returns, declining 1.12% year-to-date amid regional market volatility. Latin America-focused funds outperformed regional benchmarks significantly, beating the MSCI EM Latin America Index by more than 6% on a year-to-date basis, positioning emerging market allocation as a key outperformance driver for the period.
Strategy-level performance divergence was pronounced. Long/short equity hedge funds emerged as the clear beneficiary of investor appetite, posting their 15th consecutive month of positive net asset flows with cumulative 2014 allocations reaching US$19.0 billion. In contrast, trend following strategies continued to face structural headwinds, recording their ninth consecutive month of net redemptions in February with outflows totaling US$12.7 billion over that period. This divergence reflects a broader market rotation toward value-oriented and event-driven strategies over passive, systematic trend-following approaches during this period.
North American hedge funds demonstrated particularly strong momentum, reaching a new high of US$1.36 trillion in assets and adding US$11.1 billion in the first two months of 2014. Specialized strategies showed mixed results: distressed debt investing funds delivered their eighth consecutive month of positive returns, gaining 2.25% in February and 3.37% year-to-date, reflecting strong credit markets and M&A activity. Japan-focused hedge funds recorded their second consecutive month of negative returns, declining 1.12% year-to-date amid regional market volatility. Latin America-focused funds outperformed regional benchmarks significantly, beating the MSCI EM Latin America Index by more than 6% on a year-to-date basis, positioning emerging market allocation as a key outperformance driver for the period.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.