Investors have pulled $16.43 billion from the hedge fund industry in June, bringing year-to-date (YTD) outflows to $44.61 billion. The news comes despite better underlying conditions for risk assets such as equities which are key to most hedge fund strategies
The information comes from eVestment's Hedge Fund Asset Flows report for June, written by the firm's head of research Peter Lauelli. It also revealed that, although overall assets under management in the industry stand at $3.273 trillion, 57 percent of reporting managers had net redemptions last month. This result capped off the fifth consecutive quarter of industry redemptions.
eVestment believes that the results reiterate the importance of hedge fund managers having a marketing and investor relations message which emphasises performance, expertise and elements which set one fund apart from another. While for investors, the software solutions company believed the report highlighted the importance of data and due diligence in the process of researching and selecting the right hedge funds.
It also argued in its commentary on the report that although interest event driven strategies continued in June and was more widespread than prior months but that macro fund flows continue to be negative. Consequently, performance will likely continue to weigh on the universe’s flows. It also suggested that EM hedge fund flows were back to positive to end Q2, even if allocations continue to be highly selective.
Alongside these findings, the report also revealed the winners and losers in its asset flow figures. For instance, Event Driven funds enjoyed a $1.89 billion boost last month. The fund category remains the asset flow leaders for the year, pulling in $10.64 billion since January.
Long/Short Equity funds are still the largest primary hedge fund strategy, with $761.53 billion in AUM. Meanwhile, Asia and Emerging Markets-focused funds were also asset winners in June pulling in $480 million, resulting in a YTD total of $730 million.
Convertible Arbitrage funds also enjoyed a positive month in June, pulling in $300 million, contributing to YTD asset flows of $940 million. These types of funds are among the smaller primary strategies, with $55.13 billion in assets under management as of June. This contrasted with other primary strategies which largely suffered outflows such as the Long/Short Equity funds. These were the biggest asset losers in June and YTD, with $5.71 billion being removed from these funds in June and $23.16 billion being pulled this calendar year.
The results of the report consequently suggest that although hedge funds have performed in a generally positive fashion so far this year, this has not stopped investors from continuing to pull money from the instruments.
