2014.06.2603:46:29UTC+00Despite modest returns, hedge funds grow to largest ever

For the first time in its history, hedge funds around the world have reached the $3 trillion mark in investments. According to a report by market researcher eVestment, this specific pooled investment industry breached the landmark amount in May with the help of increased assets and incoming monthly allocations.

The information provider said in the report that the equities market was the destination for a majority of hedge fund investments. More than half of the monthly inflow were directed to stocks worth $11.5 billion helping equity funds reach $59.4 billion for the year so far.

New money flowing in to hedge funds last month amounted to $22 billion which pushed the total to its largest first half volume in seven years of $93 billion. Together with last month’s $37.8 billion in assets from performance gains it pushed hedge funds just above $3 trillion. In the previous month of April, it had a total value of $2.7 trillion according to a separate fund analyst, HFR Inc.

Hedge funds are becoming an even more popular choice for investors who fear a turnaround in the market despite underperforming the past few years when compared to other investment options.  In the period of last March and April, hedge funds posted consecutive losses, but managed to recover with gains in May. Many hedge fund returns, however, still fall short of the performances of indexes such as the Standard & Poor 500 which has set numerous record highs this year.