Hedge fund strategies come in and out of favor as the economic environment they thrive in ebbs and flows.
The event-driven strategy has been riding high as the leading strategy benchmark for the past two years, thanks to consistent performance, and it topped the charts again in the first half of 2014, according to alternative investments data provider Preqin.
The strategy was up 5.2% through June 30, compared with the overall hedge fund benchmark return of 3.9%.
Investors have taken notice, Preqin reported. Event-driven was the second most searched-for strategy during the second quarter after long/short equity, replacing macro, which had been the place holder in that position for some time.
Moreover, 12% of all fund launches in the first half used the strategy, a proportion that has held steady over the past six quarters.
Not so fortunate were funds that employ a multi-strategy approach. These posted a first half return of 3.2%, below the overall benchmark.
Launch activity also tapered off, with just 3% of all hedge funds rolled out in the first half having a multi-strategy component.
Preqin noted that some institutional investors remained interested in multi-strategy funds. Thirteen percent of all searches initiated in the first half used a multi-strategy approach, down slightly from the last six months of 2013.
Hedge funds that invest in North America outperformed those focused on all other regions in the first half, according to Preqin. Returns for the six months to June 30 averaged 6%.
North America-based firms represented approximately 70% of all hedge fund launches in the first half, and the proportion of new funds with a North American focus also increased.
Preqin reported that institutional investors based in North America continued to drive inflows into the hedge fund sector, and accounted for 46% of all investor searches initiated during the second quarter.
It predicted that North America would continue to drive the growth of the industry going forward.
Preqin’s report from the Eastern Hemisphere were not so bright.
Asia/Pacific-focused hedge funds foundered in the first half after having delivered returns of more than 8% in both the first and second half of 2013.