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Hedge funds see biggest inflows in 20 months in March even after badly trailing the market

  • Hedge funds have hauled in $21.9 billion so far in 2015, including $15.7 billion in March, according to eVestment.
  • The March inflows are the best since August 2015.
  • However, investors have bet heavily on macro strategies that have performed poorly this year.

After flocking from hedge funds in 2016, investors are beginning to find their way back.

In fact, March saw money came back into the $3.1 trillion industry at the fastest pace since August 2015 — a 20-month span that saw fund managers adjust fees and make other concessions as clients fled.

The month saw inflows of a healthy $15.7 billion, capping off a first quarter in which a fresh $21.9 billion in cash came in, according to industry tracker eVestment.

That follows a dismal year that saw $106 billion in outflows, the worst since the financial crisis, according to eVestment's count.

The interest this year has come despite a period that was nothing special return-wise. The funds that eVestment track saw a 2.63 percent gain, well below the S&P 500's 6.1 percent move for the first quarter. March's jump in cash accompanied returns of just 0.33 percent.

Moreover, investors have been putting their money in the wrong places so far.

The New York Stock Exchange, on Wall Street
Michael Nagle | Bloomberg | Getty Images
The New York Stock Exchange, on Wall Street

More than half this year's inflow — $11.46 billion — has gone to macro-based funds, which have rewarded clients with a measly 0.77 percent return so far. Managed futures have been the biggest laggard class, down 0.3 percent, while still attracting a healthy $6.47 trillion in new cash.

Equity has been the best strategy, with a return just shy of 4 percent, and has attracted $5.64 billion.

Analysts at eVestment figure that clients are going to macro strategies in anticipation of "market turbulence" ahead. The category actually saw net outflows of $9.8 billion in 2016 and just $1.3 billion in inflows for 2015.

During January and February, more than 70 percent of funds produced positive returns; in March the number dropped to 60 percent, but both figures were above the two-year average of 56 percent.

Over the past several years, large funds have performed best, though this year funds with less than $250 million in assets have led, gaining 2.76 percent.

Correction: Investors flocked from hedge funds in 2016. An earlier version misstated the year.

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