Hedge fund launch volume rose 70% quarter-over-quarter in the first three months of 2024, to 146. According to a June report from Chicago-based research firm HFR, this figure was the highest since the first quarter of 2022. At the same time, the number of hedge fund liquidations remained roughly on par with the fourth quarter of 2023, with 106 funds closed.
Equity hedge funds led the launches in the first quarter, at 75. Within this category, technology-focused large-cap equity strategies heavily dominated.
In the first quarter, hedge funds with an equity protection strategy represented 29.07% of the industry's assets. They were followed by hedge funds with event-driven strategies (28.07%), relative value strategies (26.24%) and macro strategies (16.63%).
“Geopolitical risk and inflation are likely to define 2024, accelerating trends from 2023 with hedge fund performance and growth trends reflecting growing interest from institutional investors seeking specialized exposure to these trends with significant capital preservation ,” HFR President Kenneth J. Heinz said in a. statement. “Managers continued to position for continued geopolitical risk driven by ongoing European and upcoming US elections, anticipating significant policy changes and trade impacts, although these risks also include ongoing and potential new military conflicts, with these risks are likely to increase throughout 2024. The combination of strong performance, specialized exposures, and capital preservation are likely to drive industry growth throughout 2024.
In terms of overall net inflows, hedge funds received inflows of $16.6 billion in the quarter, after seeing net outflows of $24.5 billion during the previous quarter. Hedge funds have recorded inflows in four of the last five quarters. The $16.6 billion figure is the most since the first quarter of 2022, when inflows totaled $19.8 billion.
of The HFRI fund-weighted composite index rose 1.41% in May and 5.18% year to date 2024. The HFRI asset-weighted composite index increased by 0.16% and 5.68% during those periods, respectively.
Among the firm's single-manager strategy indexes, the Capital Protection Index rose 2.39% in May and 5.97% year-to-date. Under this category, the Energy/Basic Materials Index (up 4.07%), the Technology Index (up 3.2%) and the Leading Quantitative Index (up 3.14%) performed best in May.
The HFRI Event-Drive Index also rose 1.56% in May. Year to date, it is up 2.76%. In that category, the Distressed/Restructuring Index (up 1.88%) and the Multi-Strategy Index (up 1.82%) performed best during the month.
The HFRI Relative Value Index rose 0.7% in May and 3.38% year-to-date. The category was led by the Fixed Income Backed Index (up 1.07%) and the Corporate Fixed Income Index (up 1.01%).
The HFRI macro index fell 0.30% in May, despite rising 6.89%, the most year-to-date. During the month of May, the Active Trade Index, Thematic Discretionary Index and Multistrategy Index remained in the positive category, although with growth below 1.0%. However, the commodity index, the currency index and the systematically diversified index fell.