Investors have piled into a select few hedge fund strategies lately.
Barclays’ capital solutions group analysed how hedge funds’ assets under management have grown in the last two years.
Barclays surveyed 110 funds, collectively managing around $375 billion in assets.
Barclays also conducted one-on-one interviews with 30 of these hedge fund managers. They also looked through regulatory filings and Hedge Fund Research’s database comprised of data on thousands of funds.
Hedge funds saw their assets climb by 14% on average, the report said. The most popular strategies have been focused on equity and bond markets.
“For instance, Equity and Credit / [Fixed Income Relative Value] had the highest average AUM growth over the last two years (+20% and +19%, respectively) — two times the next highest strategy (Multi-strategy) in our sample,” the report said.
“This reflects both recent performance as well as investor interest in these strategies over the past couple of years.”
Multi-strategy hedge funds, which tend to invest in equity, interest rate and currency markets, are still seeing their assets grow, just not as much as in the last few years.
Barclays also found that most of the systematic/ volatility and macro hedge funds saw either no change to their assets or a reduction.
Size also matters when it comes to asset flows. The bigger firms are the ones getting the investor checks.
“Anecdotally, most of the ‘buzz’ in the HF industry has been about smaller and emerging HFs, yet most flows still go to larger, more established firms. Over the last four years, at least four-fifths of net flows have gone to $1bn+ firms, and more than half have gone to the largest firms ($5bn+). The next largest HF size category, $500mn — $1bn, has seen an increase in flows on an annual basis, but still achieved a high of only 3% of overall flows over the period,” the report said.
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