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Alternative Market Briefing

Hedge fund asset flows turn negative in the second quarter

Friday, July 19, 2013

Bailey McCann, Opalesque New York:

June redemptions turned Q2 flows negative and flows for the first half of 2013 are the second slowest in the last ten years lagging only 2009 in the aftermath of the financial crisis, according to new data from eVestment. Macro funds outflows were the key to June’s redemptions. Mediocre performance resulted in persistent outflows for managed futures funds through the second half of 2012 and most of 2013, the same fate appears to have caught up to macro strategies.

Investors withdrew approximately $10.1bn during the month. Asset weighted performance was the lowest in 21 months, and overall industry AUM dropped by 2.5% to $2.656tn. Overall for the quarter, investors have removed $4.3bn.

The long-term trend of redemptions from equities and allocations to credit returned in June. This may be another consequence of the convergence between the traditional and the hedge fund sectors. Where exposures and approaches have meaningful overlap (fundamental equity valuation), institutional investors may be comparing traditional with alternative investments and in some cases opting for the former.

Credit strategies rebounded overall after a dip in May, reflecting trends noted yesterday, by leading hedge fund managers. Investors and funds continue to be positive on areas of s......................

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