New investments into hedge funds in February 2016 were a trickle at USD4.4 billion with performance losses of USD24.5 billion dropping overall industry AUM to USD2.94 trillion, according to the February 2016 eVestment Hedge Fund Asset Flows Report.
February has historically seen elevated flows into the industry. Over the prior six Februaries, from 2010 to 2015, investors added an average of USD22.6 billion in net new capital to hedge funds, according to eVestment data. The dramatically reduced new investment into hedge funds this February reflects investor dissatisfaction with 2015 returns.
While overall asset flows are a challenge for the industry, funds that performed well in 2015 have been the beneficiaries of investor interest so far in 2016. In the first two months of the year, hedge funds that posted gains of 5 per cent or better in 2015 have received nearly USD14 billion in allocations, while those with negative returns in 2015 have had USD28 billion redeemed. This latest report offers charts that highlight asset flow trends by fund type, performance and size, offering a unique view of the industry not available from any other data provider.
Commodity strategies continued to receive new capital inflows in February at USD1.8 billion, which was the largest in the current streak of six consecutive months of positive investor sentiment for commodity-focused hedge funds.
Fixed-income/credit focused hedge funds saw inflows of USD2.5 billion in February, with larger funds being the primary beneficiaries. Flows in this space had been negative in the prior five consecutive months and in seven of the last eight months. Inflows into the credit space may be signal that investors believe the majority of damage has been done and opportunities exist in this segment.
Managed futures funds saw a return of positive investor interest in February, halting three consecutive months of redemptions with USD3.61 billion in asset inflows.
Macro funds were the biggest losers among major hedge fund segments in February, dropping AUM by USD2.78 billion in the month. Large macro funds lost a net USD2.4 billion of investor assets in February, accounting for the majority of the strategy’s USD2.78 billion of redemptions.
