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Hedge funds continue to see asset outflows in October, YTD outflows at $77m

Monday, November 21, 2016
Opalesque Industry Update - 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.

Some other interesting points from the new report, according to eVestment Vice President and Global Head of Research Peter Laurelli, 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.

·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.

·The outlook for macro hedge funds may actually be positive, despite October being the tenth 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.

·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.

Hedge funds are facing difficult times, but the $3 trillion industry is not on the verge of disappearing. The issues of expensive access to increasingly marginalized and potentially replicable returns streams has and will continue to force change.

Savvy institutional investors have more choices, more technology and more influence on their side than ever before. And while industry surveys point to institutional investors increasingly interested in alternative investment vehicles, current industry trends may point to rising interest in private markets as opposed to hedge funds for institutional investors looking for alternative exposures.

The full report can be downloaded here:

Article source - Opalesque is not responsible for the content of external internet sites

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