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Net outflows return to hedge funds for second time this year, flows still positive YTD

Wednesday, July 28, 2021
Opalesque Industry Update - Investors withdrew $10.99 billion from the global hedge fund business in June, the second month this year net flows for the business were negative, according to the just-released eVestment June 2021 Hedge Fund Asset Flows Report. Net flows were also negative in March of 2021, but general enthusiasm for the hedge fund business this year has year-to-date (YTD) asset flows still in the green at +$28.69 billion.

At the mid-way point of 2021, the hedge fund business is almost half way to making up the $59.32 billion investors pulled from hedge funds in 2020 according to eVestment data. Strong performance this year - average hedge fund performance stands at +9.24% through June - has also added to industry AUM, which now stands at $3.55 trillion.

"The June data does not paint a negative portrait overall," said eVestment Global Head of Research and report author Peter Laurelli. "The volume of net flow was relatively light and the proportion of products with redemptions in June was below the prior five-year average. While net outflows are by definition a negative, the redemptions in June are not overly concerning amid an otherwise positive year for the hedge fund business."

Managed Futures funds were the big asset winners in June, pulling in +$1.92 billion in new money last month. YTD Managed Futures funds have pulled in +$8.05 billion.

"From Q2 2018 through Q2 2020, Managed Futures funds had net outflows in every single quarter," said Laurelli. "But the onset of the pandemic appeared to change investors' sentiment to the group. Performance has been a key theme for relative success within the group this year. Managed Futures products dominating the inflow picture in 2021 returned an average of almost 9% last year and just over 8% so far this year."

Macro funds were the biggest asset losers among primary strategies eVestment tracks, with investors pulling -$5.57 billion from these funds in June. These redemptions pushed Macro funds into negative asset flows territory YTD, with these funds sitting at -$70 million for flows at the mid-point of the year.

Where flows were positive in June, they were underwhelming, with only Event Driven (+$370 million), Convertible Arbitrage (+$130 million) and Relative Value Credit (+$60 million) funds in the green for asset flows last month.

Directional Credit funds also saw some big investor redemptions in June, with investors in these funds pulling -$2.06 billion last month. Directional Credit funds are still in the green for asset flows for the year, at +$1.18 billion.

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