NEW YORK, Jan 24 (Reuters) - The hedge fund industry

ended 2024 with $4.51 trillion in assets under management, a

9.75% increase from the previous year, research firm HFR said on

Friday.

Total assets increased by $401.4 billion last year, the

highest amount since 2021, mainly driven by a strong performance

across different strategies.

WHY IT'S IMPORTANT

The growth in hedge fund assets underscores how influential

this less regulated and leveraged industry, which uses a vast

array of trading strategies and assets, is in markets.

It also shows that hedge funds regained a bit of traction

among investors. Hedge funds' net inflows last year totaled

$10.47 billion, the first calendar year in which more money came

in than out of the industry since 2021. In the last quarter,

however, outflows amounted to $12.57 billion.

CONTEXT

Hedge funds' assets have grown by almost 56% since 2015,

although the industry has struggled to lure new money from

investors. Over the last decade, outflows surpassed inflows by

$166.8 billion, showing that funds' performance has driven the

industry growth, not new money.

BY THE NUMBERS

On average, hedge funds posted a 9.83% gain to investors in

2024, according to HFRI Fund Weighted Composite index, with

positive results in equity, macro, event-driven and relative

value strategies. That compares with a 23.3% return of the S&P

500.

KEY QUOTE

Kenneth J. Heinz, president of HFR, said portfolio managers

are "preparing for a wide range of market cycles, with the

possibility for volatility and dislocations as investors adapt

to new policies regarding interest rates/inflation, legislation

and tariffs" in 2025.

"Total global hedge fund industry capital rose to a fifth

consecutive quarterly record as managers, institutions and

investors positioned for sweeping policy changes which are

likely to have significant and far-reaching implications for

U.S. and global financial market structure, regulation and

capital," he added.