June 26, 2014

Total assets in the hedge fund industry raced past $3 trillion for the first time in its history, according to a new study from data tracker eVestment. The firm says the asset growth is driven by investor flows, which it says are at the highest level since the beginning of 2007. Some $22 billion of new capital was added to hedge funds in May, bringing total flows to $93.3 billion for the year-to-date, the largest five-month total to begin a year since 2007, according to eVestment. Performance gains kicked in $37.8 billion to total assets under management in May.

Investors continued to allocate to equity exposure in May, a trend which has persisted since June 2013, eVestment adds in its report. Event-driven strategies received the largest amount of new assets in May thanks in large part to the strong popularity of activist funds. Although macro funds enjoyed their second straight month of net inflows, assets remain down for the year.

Over in Asia, Japanese investors indicated that they plan to hold tight with their hedge fund allocations this year. According to a survey of more than 130 investors with over $3.8 trillion in assets conducted by the Japanese branch of industry trade group AIMA and Singapore-based data provider Eurekahedge, the average share of their alternative investment portfolios allocated to hedge funds will remain at 72.5 percent for 2014, as with the prior year. Last year, hedge funds and funds of funds investing Japan rose, on average, by about 28 percent. Many respondents plan to boost their exposure to long-short equity hedge funds and event-driven strategies while cutting their exposure to CTA/managed futures funds, macro funds and fixed income strategies, according to the survey. Also, Japanese investors plan to boost their allocations to global, Asia ex-Japan and Middle East/Africa mandated funds and reduce their exposure to Latin America and Europe.

George Soros’ Soros Fund Management boosted its stake in Penn Virginia to 9.53 percent and repeated its demand that the energy company put itself up for sale. We believe there are numerous potential acquirers who would be interested in acquiring the company at a material premium to its current trading price, as demonstrated by any number of precedent transactions in the industry, states Soros’ chief investment officer Scott Bessent in a letter to the company’s board of directors. Should you fail to start exploring sale alternatives, we reserve the right to take any and all actions we believe necessary to ensure that shareholder value is not further eroded.