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Hedge funds lure biggest inflow in 7 years in Q1-HFR -Breaking


© Reuters. FILE PHOTO – Traders are seen working on the New York Stock Exchange’s floor in New York City (USA), January 25, 2022. REUTERS/Brendan McDermid/File Photo

NEW YORK, (Reuters) – Investors poured $19.8 Billion into hedge funds during the first quarter. This is the largest inflow since 2015’s second quarter. The funds were lured by volatile market gains, data provider HFR reports.

HFR stated that almost $13 trillion was spent on event-driven Hedge Funds, which were mainly for distressed assets or special situation funds.

The total capital of hedge funds remained at approximately $4 trillion in December, despite the poor performance of event-driven and equity funds.

The industry saw total assets drop by $76.2B in the third quarter. However, macro and relative values funds attracted $50.5B, HFR revealed.

HFR president Kenneth J. Heinz stated that institutional investors will likely continue to increase their investment in funds that combine effective, volatile-positive capital preservation with managers offering opportunistic exposure at interest rate and inflation trends. These effectively complement existing portfolio holdings as well as duration.

Record net inflow of money occured despite hedge funds ending the first quarter of this year 0.78% down, the HFRI Fund Weighted Composite Index showed, but outperforming the S&P index, which declined 4.60%.

The quarter saw 6.8% growth in macro-hedge funds which were positioned to bet on macroeconomic trends. This was because the fund’s ability to maneuver well through highly volatile markets made them a good choice.