Hedge funds have broken the pre-crisis record for money inflows. How do they attract investors?
Hedge funds attracted almost $34 billion in the three months ending in September, according to Hedge Fund Research data cited by Bloomberg. This is the largest quarterly net inflow since 2007, that is, since the period before the global financial crisis, which changed the attitude of investors to risk. As a result, the assets of the global hedge fund industry reached a record $5 trillion, the agency writes.
During the 2008 crisis, hedge fund assets fell sharply, and recovery took several years. Amid pressure from high commissions and the growing popularity of ETFs and other passive instruments, investors gradually withdrew from active management, Quartz explains.
Why money is going into hedge funds again
The return of interest in hedge funds is due to several factors at once. First, the funds are showing steady results, explains Bloomberg. The average return of hedge funds on all strategies for the quarter amounted to 5.4%, and the highest returns were shown by investments in equities and global macro strategies.
Additional stimulus was the growth of geopolitical uncertainty. Against the backdrop of U.S. President Donald Trump's policies and fluctuations caused by trade disputes and duties, investors are seeking market-independent returns, Bloomberg notes.
"We are now looking for instruments that will help diversify the portfolio, resist hype around particular segments of the economy and can generate alpha - that is, returns that are independent of market fluctuations, both in favorable conditions and especially during periods of volatility," said Adam Singleton, chief investment officer of Man Group's External Alpha division.
In the US, investments in hedge funds are available only to accredited investors - those who have sufficient capital or financial knowledge to take on increased risks. This includes investors with an annual income of at least $200,000 or a wealth of $1 million or more, Quartz says.
However, the bulk of assets under fund management belong to large institutional investors, such as pension funds, university endowments (investment funds attached to universities) and government organizations. These organizations use hedge funds for diversification and long-term growth of their investments, the publication explains.
This article was AI-translated and verified by a human editor
