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Hedge Funds Continue to See Asset Outflows in October, YTD Outflows at -$77 Billion
Industry seems to be stagnating as investors take cautious approach, look at other investment options.
The breadth of hedge fund asset outflows in October was the industries’ largest in 2016, with 61% of reporting funds seeing net outflows for the month, according to the just-released eVestment October 2016 Hedge Fund Asset Flows Report. October’s -$14.2 billion outflow marked the fourth month of redemptions in the last five, with year to date (YTD) hedge fund assets down -$77 billion.
Overall industry AUM is getting dangerously close to dropping below $3 trillion. Industry assets now stand at $3.03 trillion now following this string of disappointing months for hedge funds.
Event driven funds took the biggest hit among major strategies, with -$4.49 billion in flows in October, bringing YTD flows to -$38.22 billion, almost double the -$19.38 billion event driving funds lost in 2015.
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Some other interesting points from the new report include:
- What bright spots the industry saw among major strategies appeared among distressed and broad multi-strategy funds, which had positive flows of $580 million and $550 million respectively.
- The outlook for macro hedge funds may actually be positive, despite October at -$180 million being the 10th monthly net outflow for the universe within the last year. Eight consecutive months of positive asset-weighted performance, against the backdrop of a rapidly evolving macro-economic landscape could be positive for flows.
- Following the big outflows in event driven funds, long/short equity funds and relative value credit funds saw big outflows in October, with -$3.41 billion and -$3.20 billion respectively.
- Managed futures funds, which had been largely positive so far this year, took a turn to the negative in October, with -$1.63 billion in flows. The strategy is still positive for the year, however, with $19.31 billion in flows as of October, compared to $13.43 billion in flows for all of 2015.
- Flow trends were negative across all major geographies, with funds focused on the America’s seeing the largest outflows at -$7.67 billion.
- Interest in emerging markets exposure, which had been a ray of hope for one segment of the industry, fizzled in October, with the segment seeing out flows of -$1.98 billion.
To download a full copy of the report, please click here.