Global Investors Rejuvenate Hedge Fund Industry - Record AUM

Optimism in the global financial markets landscape has bolstered the amount of funds deposited in hedge funds. Investors added $18 billion between the three months of July and September, extending year to date levels to $190 billion, the figures highlighting the role of Volatility in directing investor interest in investment products.

Traders at the world’s leading hedge funds will benefit from larger pots of cash to place trades as funds have spiked-up. Investors were feeling positive about placing funds with the firms according to figures from the Hedge Fund Research. The data coincides with news of hedge funds performing well in September, thus boosting the entire industry as funds enter the last quarter of 2014.

The report shows that inflows accounted for most of the third-quarter growth, with $15.9 billion in net new capital making its way to hedge funds. Investors favored relative-value arbitrage and event-driven strategies during the quarter, committing a total of $22.5 billion to the two. Equity hedge funds took in $4.55 billion in new money.

Hedge Funds Performance Up

A recent spree of volatility in global financial markets in September have jump-started the overall industry with trading volumes picking up across all asset classes. The upbeat mood was also prevalent in the performance of hedge funds with several key benchmarks reporting positive data.

A leading equity focused fund saw its best results since the financial crisis six years ago, the Segantii Asia-Pacific Equity Multi-Strategy Fund returned a galloping 29 percent in the first three quarters of 2014, after having the best month since its 2007 inception in September, according to an update sent to investors.

At the same time, the Credit Suisse Hedge Fund Index also posted promising results, although the fund was not trading in the green it reported a loss of 0.01% for the month of September, thus pushing hedge fund benchmark up to 3.41% on the year, during the same month the Standard & Poor’s 500 Index drop about 1.5%.

A similar trend at the Barclay Hedge Fund Index compiled by BarclayHedge, the firm reported that Hedge funds lost 1.18 per cent in September, however despite the loss the index remains up 3.10 per cent.

“Anticipation of Fed tightening and ECB loosening poured cold water on equity markets and drove US interest rates higher on the month,” said Sol Waksman, founder and President of BarclayHedge in a statement.

Hedge funds are crucial components of the overall financial markets environment. Their performance is widely tracked by both buy and sell-side participants as they represent the overall trend in the market. Hedge funds trade across diverse asset classes, often transacting on leverage.

Arek Okrasa, a London-based professional trader, spoke about the performance of hedge funds in September in a comment to Forex Magnates: “Hedge funds have given a much needed boost to the wider market, I regularly review certain funds to gain insight into market trends and direction.”