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Hedge fund investor outflows light in October; outflows adding up for the year

Thursday, November 26, 2020
Opalesque Industry Update - Investors removed approximately -$5.04 billion from hedge funds in October, according to the just-released eVestment October 2020 Hedge Fund Asset Flows Report. Compared to overall hedge fund industry AUM, which stood at $3.148 trillion at the end of October, this is a small amount. But outflows for the year are adding up, with investors having pulled -$54.67 billion from hedge funds year-to-date (YTD).

This pales in comparison to the $102.25 billion investors pulled from hedge funds during 2019, but barring a holiday-season miracle, overall hedge fund asset flows for 2020 will be negative too.

However, eVestment Global Head of Research Peter Laurelli notes that a large number of funds, primarily those with consistent and strong performance, are attracting new assets.

"One theme which has defined the year for hedge fund flows in 2020 is that those who have been able to navigate a tumultuous set of market conditions have been rewarded, and those who have not are experiencing significant consequences," said Laurelli. "We've seen this play out across multiple strategies and persist over many months. For managers on both sides of the coin, 2020 seems to be producing career-defining moments."

Some asset flows highlights from the October eVestment report include:

Multi Strategy hedge funds were the big asset winners in October, with investors adding +$2.45 billion to these funds during the month. Multi Strategy funds and managers have had a challenging year of up and down asset flows and these funds are still in the red YTD, but just barely at -$370 million.

Among other primary strategies eVestment tracks, those in the green for October - Event Driven, Market Neutral Equity, Convertible Arbitrage and Distressed Funds - were just barely so, with each pulling in less than a billion dollars in new investor money.

Long/Short Equity funds were the big asset losers in October, with investors pulling -$3.04 billion from these funds. YTD outflows have also been significant, coming in at -$14.04 billion YTD.

Macro funds are seeing a similar story, with investors pulling -$2.52 billion from these funds in October and -$19.08 billion YTD.

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