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Alternative Market Briefing

Hedge fund AUM reaches $3.31tn as of 31 March 2020, down by 9.4% from Q4 2019

Thursday, May 28, 2020

Laxman Pai, Opalesque Asia:

The 2020 coronavirus pandemic around the world has severely affected the global economy causing economic distress on the hedge fund industry in Q1.

Industry assets under management (AUM) fell by 9.4% from Q4 2019 to $3.31tn as of 31 March 2020, stated Preqin. This is the first time AUM has fallen below $3.5tn since Q4 2018.

Poor performance accounted for the majority ($296.1bn) of lost assets, with investor redemptions totaling $47.7bn. This brings hedge funds to eight consecutive quarters of outflows.

Almost all top-level strategies suffered outflows in Q1. Macro strategies and CTAs recorded the greatest capital withdrawals, at $10.8bn and $10.7bn respectively.

Event-driven strategies followed closely behind: investor redemptions totaled $8.3bn for the quarter following a poor return of -16.72%.

The strategy lost just over a fifth (21%) of all assets as AUM dropped to $152.7bn. Only niche strategies recorded inflows, with 54% of such funds experiencing inflows; though at $0.3bn these gains were incremental.

Managers based in the Rest of the World region endured a very tough first quarter of 2020, the report said.

Following significant volatility and poor performance, investors withdrew $12.6bn. Subsequently, AUM dropped to $20.8bn - marking a 44% fall since the end of 2019.

North America was the only top-level region to record net inflows, at $25.4bn.

The data shows that funds that perform well are more likely to r......................

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