Hedge Fund industry's summer trends
In August the alternative investments industry is reported to have positively offset wide spread redemptions affecting specific alternative investment strategies with substantial new fund inflows. In fact, the search for yield and consistent return have driven both retail and institutional investors to prefer hedge funds over other investment options. This trend is confirmed by a USD1.8bn of inflows experienced by high yield funds, as well as, by municipal and mortgage backed bond funds which have experience, respectively, 51 and 75 consecutive weeks of net inflows. The dividend equity funds have, therefore, peaked at USD29.6bn, followed by a wide range of other alternative investment strategies, from volatility arbitrage to currency and long/short funds which have attracted the biggest weekly inflows in the last 2 years. It is also reported that Global-tracked emerging market equity funds have offset a USD847m pullout from equity funds registering 3 consecutive weeks of inflows.
During the last weeks Korea has firmly replaced China as preferred choice for country specific exposure in emerging Asia, outperforming China's USD138m inflows with intakes amounting at USD477m. In the same period, strong interest regional markets have experienced constant outflows affecting Thailand, Philippines and Vietnam's equity funds. Additionally, with the advent of retail investors committing fresh money in the Europe and Japan Equity funds, institutional investors have started to pull away from Japan focus funds following the disappointing data related to its bigger than expected trade deficit.
Finally, the two major diversified developed markets have taken two opposite paths: while Global equity funds have registered they biggest outflow since early July, Pacific equity funds hit a 5 week high. More specifically, investors committed substantial sums ranging from USD23m to USD1.5bn to commodities, energy, financial, real estate and technology sectors finds; while redeeming up to USD283m from utilities, infrastructure, consumer goods, industrial and telecoms sector funds.