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Alternative Market Briefing

Hedge fund assets decline in Q1, event driven leads outflows

Thursday, April 21, 2016

Komfie Manalo, Opalesque Asia:

Hedge fund capital declined in the first quarter of this year as volatile markets and early quarter performance resulted in falling investor risk tolerance and led to redemptions from underperforming strategies, according to the latest HFR Global Hedge Fund Industry Report, released by HFR. Total global hedge fund capital declined to $2.86tln, including investor outflows of $15.1bn marking not only the largest quarterly outflow since 2Q09, but also the first consecutive quarters of outflows since 2009.

The HFRI Fund Weighted Composite Index posted a decline of -0.67% in 1Q16, despite paring the January decline of -2.6% with the March gain of +2.0 percent. First quarter performance was led by quantitative Macro and trend-following CTA strategies, with the HFRI Macro Index gaining +1.4%, while the HFRI Macro: Systematic Diversified Index advanced +2.7%. Despite these performance-based gains, total hedge fund capital in macro strategies declined to $548bn, inclusive of a net investor outflow of $7.3bn. Discretionary thematic funds suffered the largest asset outflow of macro sub-strategies, while active trading experienced a partially offsetting capital inflow.

"The hedge fund industry began 2016 with a fractional decline as widely-anticipated asset outflows associated with manager-initiated return of investor capital and private family office conversions were only partially of......................

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