Hedge funds attracted their highest global net inflows in seven years in 2014, and the total size of the industry has risen to nearly $3 trillion, hedge fund tracker HFR said on Tuesday. Net inflows were $76.4 billion in 2014, the highest since 2007, the Chicago-based research group reported.
While overall flows were strong for the year, the pace of new money slowed dramatically in the fourth quarter, HFR said. Only $3.6 billion was added in the quarter, compared with $15.9 billion in the third quarter and $30.5 billion in the second quarter. In 2013, hedge funds took in $63.7 billion, with $10.5 billion added during the last quarter, HFR said.
New money coupled with performance gains brought the size of the industry to $2.85 trillion at the end of 2014, according to HFR. Industry experts attributed some of the fourth-quarter slowdown to lackluster returns, noting that hedge funds finished the year with a modest 3.3 percent gain, far less than the 9.13 percent return in 2013. They also lagged behind the rallying stock market, where low interest rates coupled with signs of economic recovery helped US equities set a string of new highs last year.