The capital of the global hedge fund sector rose during the second quarter of the year, new figures show.

The capital of the world’s hedge fund industry expanded in the second quarter of this year, recovering from a fall in the first quarter, reaching $2.898 trillion by 30 June. This was a rise of $42.06 billion during the quarter, according to Hedge Fund Research.

During the same period, the HFRI Fund Weighted Composite Index produced by the Chicago-headquartered tracker rose by 2.0 per cent, it said yesterday.

Investor redemptions fell to $8.2 billion in the quarter, decreasing by nearly half from the $15.1 billion outflow in the prior quarter. However, Q2 represents the third consecutive quarterly outflow for the hedge fund industry, HFR said.

Performance-based gains drove total event-driven strategies’ capital to $743.1 billion, a quarterly increase of $13.1 billion, as the HFRI Event Driven Index gained 2.8 per cent, the strongest gain of any type of hedge fund strategy. However, event driven strategies suffered net investor outflows of $3.5 billion in the quarter, concentrated in special situations and distressed/restructuring sub-strategies, though these were partially offset by net inflows into merger arbitrage and ED: multi-strategy funds.

Fixed income-based relative value arbitrage (RVA) strategies posted similar performance-driven asset gains, as the HFRI Relative Value Index added 2.9 per cent in the quarter, vaulting total RVA capital to $784.4 billion. This neared the record level of RVA capital set in Q2 2015.

The HFRI Macro Index gained 1.68 per cent in Q2, increasing total capital invested in macro strategies to $557 billion, its highest asset level since Q1 2015. Macro hedge funds experienced a net investor outflow of $2.6 billion, although this represents nearly a two-thirds decline from the $7.3 billion redeemed in the prior quarter.

Hedge fund capital invested in equity hedge funds, the industry’s largest strategy area by capital, rose to $813.9 billion in the second quarter, an increase of $7.5 billion from the prior quarter. Despite this, total equity hedge assets remain below the 2015 level of $829 billion.