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eVestment: Hedge funds see outflows in September

Friday, October 30, 2020
Opalesque Industry Update - The global hedge fund industry saw outflows of -$9.66 billion in September, bringing industry assets under management to $3.161 trillion, according to the latest fund flows data from eVestment. In spite of the September outflows, the industry had a positive flows quarter, with +$8 billion in new assets for the third quarter. This marks the first quarterly net inflows since Q1 2018.

Any advantages larger funds were seeing earlier in the year appear to be muted as 2020 comes to a close, says eVestment Global Head of Research Peter Laurelli.

"There were months not too long ago when we would consistently focus on the evidence of increasing concentration of assets among the largest managers in the hedge fund industry," said Laurelli. "As the post-pandemic environment continues to create greater dispersions of returns across the industry, however, this evidence of rising concentrations of assets is not the primary theme in the data. What is more noticeable is the influence of returns on both allocations and redemptions. The data is showing it across multiple strategies, that those gaining new assets are among the outperforming managers, while the largest redemptions are coming from those with elevated losses."

Another major theme in the data for September was generally small flows in and out of fund types, without the major shifts in investor preferences for types of funds seen often in the past.

Among primary strategies eVestment tracks, only three were positive for flows in September - Market Neutral Equity funds (+$1.46 billion), Long Short Equity funds (+$930 million) and Event Driven funds (+$310 million). Of those, only Event Driven funds are also positive for both the third quarter and year to date (YTD), at +$3.49 billion and +$6.88 billion respectively.

Macro funds are having the hardest time in 2020 among primary strategies eVestment tracks. These funds saw investor redemptions of -$5.17 billion in September. And while they are positive for the third quarter (+$1.48 billion), they are deeply in the red for 2020 YTD, at -$18.29 billion.

Directional Credit funds were also big asset losers in September, with investors pulling -$3.79 billion during the month. This brought quarterly investor redemptions from Directional Credit funds to -$6.07 billion and YTD redemptions to -$14.76 billion.

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