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Hedge Fund Redemptions Top $100 Million for 2016
In spite of strong performance in 2016, some investors lost patience with hedge fund strategies.
Hedge fund assets remained above $3 trillion to end 2016, despite redemptions of over $100 billion, according to Atlanta-based eVestment's Hedge Fund Asset Flows Report for December, Q4 and Year-End 2016. December marked the sixth month of outflows in the last seven and resulted in Q4 being the largest quarterly outflow from the industry since Q1 2009, during the financial crisis.
The redemption pressures in the industry appear to have been driven by some lack-luster 2014 and 2015 hedge fund performance numbers, which may have sapped some investors’ patience with hedge fund fees and investment strategies. The past year also saw several high-profile funds have very public stumbles. But the redemptions in late 2016 may mean many investors missed some strong performances, as reported recently.
Some highlights from the report include:
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- Investors redeemed $23.7 billion in December and $43.2 billion in Q4 2016.
- The biggest asset gainers of the year were managed futures products, even though they produced the worst average returns of any major strategy.
- Event driven strategies lost more investor money than any other universe in 2016 and in 2015, but produced some of the industry's best returns this year.
- After a nineteen-month span of negative investor sentiment towards emerging market hedge funds, investors slowly started to return.
To download a full copy of the report, please click here.