Evening Brief – 04.24.23
The global hedge fund industry saw net new inflows of $9.1 billion in the first quarter, the first since the first quarter of 2022, according to Hedge Fund Research (HFR), a firm that tracks the industry. Meanwhile, total global hedge fund capital rose to $3.88 trillion, a quarterly increase of over $50 billion.
The net new inflows come despite the increase in banking and financial risks, and the heightened concern of recession.
The investable HFRI 500 Fund Weighted Composite Index gained 0.52% in the first quarter, led by directional Equity Hedge and Event Driven strategies, both of which navigated a bank turmoil, including the collapses of Silicon Valley Bank and Signature Bank, weakness in regional banks and the government-facilitated acquisition of Credit Suisse by UBS.
Directional Equity Hedge strategies led both capital inflows and total strategy asset increases in first-quarter performance, as tactical positioning through the volatile month, as well as underlying strength in the tech sector fueled gains, according to HFR.
Total Equity Hedge capital increased by roughly $33 billion to end the quarter at $1.11 trillion, driven by strong performance-based gains and an estimated net asset inflow of $3.3 billion.
Event-driven hedge funds, which target stock mispricing and other valuation anomalies stemming from mergers and acquisitions, bankruptcies, takeovers and other corporate events, saw an increase of about $18.4 billion, raising total capital to $1.054 trillion. These strategies navigated not only the bank risk but choppy swings in rates as well as an extreme dislocation and repricing of AT1 bonds associated with the government facilitated acquisition of Credit Suisse by UBS.