# Hedge funds set to end 2021 with inflows for first time in three years
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-12-15
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Hedge Funds Set for Positive Inflows in 2021
Meta Description: Discover how global hedge funds are attracting investments in 2021 due to strong returns and investor shift to alternative assets amidst market volatility and
URL: https://financedigest.com/hedge-funds-set-to-end-2021-with-inflows-for-first-time-in-three-yearshtml

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By Patturaja Murugaboopathy

(Reuters) – Global hedge funds are poised to achieve positive inflows in 2021, for the first time in three years, data from Preqin shows, thanks to strong returns and an investor shift to alternative assets during a period of volatility and rising inflation.

Alternative assets data and analytics firm Preqin’s data shows hedge funds have attracted flows totalling $40.9 billion in the first three quarters of the year, after outflows of $97.2 billion and $44.5 billion in 2019 and 2020 respectively.

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/12/272.jpg)

(Graphic: Quarterly flows into [hedge funds](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund"), https://fingfx.thomsonreuters.com/gfx/mkt/jnvweabzavw/Quarterly%20flows%20into%20hedge%20funds.jpg)

[“Investors are looking to hedge funds](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone") to achieve a measure of diversification, particularly considering that the specter of inflation has recently entered the fray,” Benjamin Crawford, vice president and head of research at alternate investment data firm BarclayHedge, said.

Several sectors of the hedge [fund industry](https://www.financedigest.com/how-solvency-ii-transformed-itself-the-fund-industry-and-regulation.html "How Solvency II transformed itself, the fund industry and regulation") have a well-earned reputation for shielding assets from inflation.

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/12/273.jpg)

(Graphic: Hedge [funds’ total asset under management](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management"), https://fingfx.thomsonreuters.com/gfx/mkt/akvezoxrnpr/Hedge%20funds%20total%20asset%20under%20management.jpg)

Analysts said the inflows are likely to rise further [next year](https://www.financedigest.com/1-in-10-workers-considering-a-career-change-in-the-next-year.html "1 in 10 workers considering a career change in the next year") due to increased market volatility and uncertainty over the Omicron variant of COVID-19.

Data from Preqin showed global hedge funds [gained 13.9% on average between January and November this year](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain"), marking their third successive year of returns above 10%. That compares with the MSCI [global stock index’s](https://www.financedigest.com/2017-global-payroll-complexity-index-reveals.html "2017 Global Payroll Complexity Index Reveals ") gain of 12.4% in the same period.

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/12/274.jpg)

(Graphic: Yearly performance of [hedge funds](https://www.financedigest.com/hedge-funds-suffer-big-outflows-in-q2-data.html "Hedge funds suffer big outflows in Q2 – data"), https://fingfx.thomsonreuters.com/gfx/mkt/byvrjqedeve/Yearly%20performance%20of%20hedge%20funds.jpg)

Event-driven strategies, which bet on corporate changes such as mergers and restructurings, led with a 15.1% gain, while [equity strategies delivered a 12.3% gain](https://www.financedigest.com/gaining-workplace-equity.html "Gaining workplace equity").

On the other hand, macro strategy funds [provided just 7% return in the first eleven months](https://www.financedigest.com/independent-study-finds-infinidat-storage-can-provide-customers-125-roi-over-three-years-and-payback-in-less-than-six-months.html "Independent Study Finds INFINIDAT Storage Can Provide Customers 125% ROI Over Three Years and Payback in Less than Six Months") of 2021, compared with more than 14% in 2020.

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/12/Hedge-funds-performance-by-strategy.jpg)

(Graphic: [Hedge funds](https://www.financedigest.com/market-turmoil-a-boon-for-trend-following-hedge-funds.html "Market turmoil a boon for trend-following hedge funds") performance by strategy, https://fingfx.thomsonreuters.com/gfx/mkt/egpbkoqwwvq/Hedge%20funds%20performance%20by%20strategy.jpg)

Global macro hedge funds have been challenged, as some common themes at the start of the year have not played out as planned, such as the steepening yield curve theme and weakness in the US dollar,” Robert Christian, co-chief [investment officer at K2 Advisors](https://www.financedigest.com/5-tips-choosing-right-investment-advisor.html "5 tips for choosing the right investment advisor"), said.

According to eVestment data, multi-strategy funds and [managed futures](https://www.financedigest.com/what-is-the-future-of-ip-management.html "What is the future of IP Management?") funds were the biggest recipients of cash into hedge funds between January and October this year, taking in $24.7 billion and $13.1 billion respectively.

Long/short [equity funds](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities"), on the other hand, witnessed the highest outflow of $12.6 billion this year.

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/12/Fund-inflows-by-hedge-fund-strategies.jpg)

(Graphic: Fund [inflows](https://www.financedigest.com/explainer-why-european-money-market-funds-inflows-are-lagging-behind-the-u-s-torrent.html "Explainer-Why European money market funds inflows are lagging behind the U.S. torrent?") by hedge fund strategies, https://fingfx.thomsonreuters.com/gfx/mkt/xmvjonqxqpr/Fund%20inflows%20by%20hedge%20fund%20strategies.jpg)

Broken down by region, U.S. hedge [funds attracted $44.3 billion](https://www.financedigest.com/global-citizen-seeks-up-to-1-billion-for-six-sustainable-impact-funds.html "Global Citizen seeks up to  billion for six sustainable ‘Impact’ funds") this year, while Europe and Asian funds obtained $2.95 billion and $2.34 billion respectively.

On the other hand, [emerging market funds](https://www.financedigest.com/where-can-you-start-building-your-emergency-funds.html "Where Can You Start Building Your Emergency Funds?") saw outflows totalling $4.86 billion, the data showed.

Seemingly, everyone is finding a reason to put their assets into hedge funds, regardless of whether they think the current [moment portends doom](https://www.financedigest.com/its-not-all-gloom-and-doom-at-the-moment.html "It’s not all gloom and doom at the moment"), the coming of a halcyon age, or have absolutely no idea what’s ahead but don’t want to be caught off guard either way,” BarclayHedge’s Crawford said.

(Additional reporting by Gaurav Dogra in Bengaluru; Editing by Vidya Ranganathan and Alexander Smith)


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