“The appetite for hedge funds remains strong even after the $300 billion California Public Employees’ Retirement System, the largest U.S. pension fund, said in September it was pulling out of hedge funds because they are too costly and complicated,” reports Svea Herbst-Bayliss of Reuters. “Hedge funds took in roughly $112 billion in new money this year even though returns have been paltry, with the average fund returning roughly 4 percent this year through November. As hedge funds posted low single digit returns, the stock market raced to a series of fresh highs and the Standard & Poor’s 500 index gained 12.8 percent since January. Last year, investors added $62 billion in new money to hedge funds.”
eVestment’s 2015 Hedge Fund Industry Outlook is generally positive as well. Among the key points released include:
- Barring a large and unexpected global or financial event, hedge funds are positioned for another year of solid growth as institutional investors seek to gain alternative exposures to traditional equity and fixed income markets. We expect asset flows into hedge funds of at least between $90 billion and $110 billion in 2015.
- Multi-strategy funds appear headed for another good year in 2015, with flows that may surpass the $48 billion YTD they saw in 2014 as their diversity makes them a natural preference for long-term institutional assets coming from traditional strategies.
“The hedge fund industry is, barring the occurrence of an outlier event, well positioned for another year of solid growth. The roles of hedge funds, and the expectations of their results, have become better defined for institutional investors’ portfolios. While there will always be investors for whom certain strategies do not fit within their scope or scale, the global institutional investment landscape dwarfs any one participant,” relayed the report released by eVestment. “With long-term trends in place and the future of global markets ever uncertain, hedge funds will continue to evolve into an institutional staple, with some casualties and great successes along the way.”