Figures for hedge funds around the world showed a sharp rise in assets in the final quarter of 2016 and for the year in general.

The global hedge fund industry held $3.02 trillion of assets at the end of 2016, rising $46.8 billion in the final three months of the year, the second straight quarterly record for sector capital, suggesting these funds have bounced back from a difficult period.

Data from Chicago-headquartered Hedge Fund Research showed that total capital in the sector rose by $121 billion in 2016.

The increase happened against a “challenging backdrop of continued investor withdrawals,” HFR said in a statement, noting total redemptions of $18.7 billion in Q4, which was lower than the $28.2 billion of withdrawals in Q3.

The rise in assets last year may suggest that this industry, which suffered from lacklustre performance in the years immediately following the 2008 financial crisis, prompting some wealthy investors to pull money out and demand lower fees, has started to recover some poise.

The HFRI Fund Weighted Composite Index - HFR’s main measure of returns – showed a gain of 5.5 per cent last year. This is the highest return since 2013, topping that of global equities and surpassing the annualised return of the index over the past five and 10 years.

Event driven strategies led asset growth in the fourth quarter, with these funds’ assets under management rising by $14.8 billion to $777.2 billion. For 2016, total capital invested in these strategies increased by $32.4 billion.

The HFRI Event-Driven (Total) Index led strategy performance for 2016 with a gain of 10.5 per cent, driven by distressed, activist and special situations exposures. (Event driven funds typically seek to profit from price movements around corporate events such as mergers, acquisitions, asset disposals and management changes.)

Even so, there were $10.8 billion of client redemptions from event driven funds in the final three months of the year, bringing the total for the year to $38.2 billion.

Also driven by strong performance, fixed income-based relative value arbitrage strategies saw the largest asset increase for the whole of 2016, with total RVA capital up $12.9 billion in Q4 and $43.9 billion for 2016, ending the year at $816.8 billion, the industry’s second largest strategy by assets.

The HFRI Relative Value (Total) Index rose 7.8 per cent for 2016, the strongest gain since 2012.

Capital invested in equity hedge, the industry’s largest strategy area by capital, increased less dramatically than RVA or event driven strategies, up by $7.5 billion in Q4 and $20 billion for 2016, rising to a record $849 billion.

The HFRI Equity Hedge (Total) Index gained by 5.5 per cent during 2016, HFR added.