In Q3 2024, global hedge fund assets reached a record high for the fourth consecutive quarter, totaling $4.46 trillion, driven by new investor inflows and performance gains amidst election and geopolitical risks. Key factors, including anticipated interest rate reductions and falling inflation, influenced strong capital inflows across various strategies.
Significant growth areas included:
Relative Value Arbitrage (RVA) and Multi-Strategy Funds: RVA strategies saw an asset increase of $37 billion, largely due to $6.7 billion in new capital flows, totaling $1.196 trillion in assets.
Equity Hedge (EH) Strategies: EH strategies rebounded with a $54.6 billion increase, driven by inflows and strong gains in Fundamental Value funds, leading to a total of $1.294 trillion in capital.
Event-Driven (ED) Strategies: Assets rose by $69.1 billion as ED funds attracted investors seeking M&A exposure, with total ED assets nearing EH’s at $1.27 trillion.
Macro Strategies: Facing asset declines, macro strategies fell by $12.7 billion as declining inflation and interest rates reduced their appeal.
Overall, larger firms ($5bn+ AUM) led in attracting new capital, while smaller firms also experienced strong inflows. Looking ahead, hedge funds are tactically positioned for further market volatility tied to upcoming U.S. elections and geopolitical shifts, with expectations for increased M&A activity in 2025 as interest rates decline.
Ref: Heinz, K. J. (2024, October 25). Global hedge fund industry report: Q3 2024. Hedge Fund Research., Hedgeweek. (2024). Hedge funds reach new asset high as geopolitical risks drive inflows in 2024.
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