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Hedge Funds Begin 2021 With Inflows

The hedge fund industry added $6.39bn in new money in January, with about 50% of funds reporting inflows, according eVestment's January 2021 Hedge Fund Asset Flows Report. January inflows are not uncommon for the hedge fund business, however; since 2010, only four times (2015, 2016, 2017 and 2019) has January seen net redemptions. Still, coming off three consecutive years of annual outflows - where almost $200bn left the industry - January’s positive number will be welcome news to many in hedge fund land.

In what could be a sign of investor concerns about the state of equity and credit markets heading into 2021, Macro and Managed Futures hedge funds both saw big inflows in January, at +$3.07bn and +$2.15bn respectively. These two fund types were the big asset winners in January among primary strategies eVestment tracks.

“This should be welcome news to these managers,” said eVestment Global Head of Research Peter Laurelli. “Macro funds have seen negative flows in the past two full years and Managed Futures funds have seen negative flows for the past three full years.”

Long/Short Equity funds were the biggest asset losers among the primary hedge fund strategies eVestment tracks, with investors pulling $3.08bn from these funds in January. However, Laurelli notes, the overall figure hides some strength in this segment.

“Looking at net flows over three of the last four month, you would think there was very little interest in these products, but that’s just not the case,” he says. “A bulk of redemptions over this window have been from a handful of products which are significantly underperforming. Outside of this group, the flow picture in January was decent for Long/Short Equity managers.”

Most of the other primary strategies eVestment tracks were in the green for flows in January, with Directional Credit, Multi Strategy and Event Driven funds each pulling in more than $1bn in new money. Convertible Arbitrage and Distressed funds were also positive for January, albeit barely. Market Neutral Equity, at -$220mn, and Relative Value Credit, at -$1.61bn, were the two other primary strategies eVestment tracks, along with Long/Short Equity funds, to see overall negative investor flows in January. Overall AUM for the hedge fund business in January stood at $3.345trn.

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