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Alternative Market Briefing

Hedge funds see outflows for the first time since December '13

Tuesday, October 21, 2014

Bailey McCann, Opalesque New York:

New hedge fund asset flows data from eVestment shows that hedge funds saw asset outflows in September for the first time since 2013. Redemptions in September were likely the result of losses in July. The impact of September's losses may become evident in the next two or three months, writes Peter Laurelli, head of research at eVestment.

Total assets in hedge funds decreased 1.5% in September to $3.012 trillion. Performance accounted for the majority of the $46.7 billion decline, but investor redemptions outpaced new allocations causing an outflow of $6.9 billion during the month.

Total industry assets declined in Q3 2014 for the first time since Q2 2012. Performance reduced AUM by $30.3 billion, the equivalent of an asset-weighted return of -1.0%. Flows were positive in the quarter as $9.6 billion was added to the industry.

The most noticeable deviation from recent trends in September came in the form of investor redemptions from equity-focused strategies, last experienced in June 2013. Investors appear to have shifted their interests back into credit strategies potentially reviving a trend that first started in 2010.

Event driven funds had a slight $210 million inflow in September bringing Q3 inflows to $7.6 billion, more than three times the amount that went to long/short equity. Activist fund flows were virtually flat in September, but also remained positive. Funds which employ activist strategies received an estim......................

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