Despite the recent rebuke of hedge funds by the influential California Public Employees' Retirement System, other investors are pumping billions into these portfolios, boosting industry assets to a record $3.1 trillion, data released on Wednesday show.
Research firm Evestment, which tracks asset flows around the world, said that global hedge fund assets grew by $49.6 billion last month. While performance gains largely fueled the increase, investors added $12.6 billion in new money in August.
Since January, investors have put $114.7 billion into hedge funds, nearly twice the amount added all of last year.
Evestment released its data just days after Calpers, the largest U.S. pension fund with $300 billion in assets and an early hedge fund investor, shocked the industry with news that it will exit the funds completely.
Calpers had said months ago that it was reviewing its hedge fund program, putting the industry on notice that some changes would be coming.
The step - Calpers will redeem $4 billion in assets from a total of 30 firms over the coming year - sparked speculation that other institutional investors might do the same, possibly echoing Calpers' complaints that hedge funds are not worth the hefty fees they charge.
But the data appear to suggest a different investment pattern, said Peter Laurelli, Evestment's head of research, noting that flows into hedge funds have averaged around $12 billion a month for the past year.
Calpers' redemptions would come out to roughly $333 million a month, a relatively small amount compared with recent inflows.
"It does appear that the Calpers' redemptions are a relative drop in the bucket when you compare them to the amount of money that is available and could be considering alternative exposures to the market," Laurelli said.
Evestment analysts have seen outflows from traditional U.S. stock investments in the last months as investors express worries about global growth and the pace of expected interest rate hikes.
But with the investors still looking for exposure to equities, equity oriented hedge funds are still a popular place to invest. Evestment data show that $77.3 billion have come into hedge funds that invest in stocks this year, nearly five times the amount that flowed into these funds last year.
Changing investor tastes are also reflected in the amount of money flowing into hedge funds that invest in fixed income. For a time these types of hedge funds dominated flows and delivered eye-popping returns. But this year, fixed income-oriented hedge funds have taken in only $28.7 billion in new money, less than half of the amount they pulled in last year.
© 2024 Thomson/Reuters. All rights reserved.