The WSJ reports,"the hedge-fund industry exceeded the $3 trillion barrier in May for the first time ever, according to one research firm, as new allocations and performance gains pushed total assets to a new record".
Some $22 billion flowed into hedge funds last month, bringing the year-to-date inflows to $93 billion, according to data provider eVestment. That’s the largest five-month total to start a year since 2007. Performance gains also added $37.8 billion in assets last month, leaving the total tally just north of $3 trillion.
"Cash has flowed into these hedge funds despite relatively muted performances over the past several years. Many hedge-fund managers have underperformed their benchmarks as the stock market has surged to record after record. Hedge funds suffered back-to-back monthly declines in March and April for the first time since April and May of 2012, according to researcher HFR Inc. These funds rebounded in May and posted gains across all main strategies", HFR said earlier this month.
"And yet, capital continue to flow toward hedge managers who purport to be better positioned for a potential market downturn.
Much of the cash coming to hedge funds has been allocated to stocks. Some $11.5 billion were added to equity strategies last month, or a little more than half of the monthly inflow, eVestment says. That brings the year-to-date total to equity funds to $59.4 billion, the best start to a year since mid-2007, eVestment said.
EVestment is the first to put total assets in the hedge-fund industry at more than $3 trillion. Other research firms have stuck to more conservative estimates. Data firm HFR pegged the industry at $2.7 trillion in April, the same month that trade publication HedgeFund Intelligence measured it at $2.6 trillion".
