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Global hedge fund assets back over USD3tn in May but Brexit turmoil could see fall

Global hedge fund assets back over USD3tn in May but Brexit turmoil could see fall

Hedge fund industry assets climbed above USD3 trillion for the first time this year in May as investors continued allocating to hedge funds, according to eVestment’s May 2016 Hedge Fund Asset Flows Report. 

But at USD3.014 billion, funds are barely above that threshold and market forces unleashed by the late June vote for the United Kingdom to leave the European Union could impact that number dramatically cautioned report author Peter Laurelli, eVestment vice president and global head of research
Leading up to June’s BREXIT vote, hedge funds domiciled in Europe saw assets fall USD3.3 billion while funds with Europe as an investment focus saw assets fall by USD1.66 billion.

Interest in commodity funds was positive again in May. Investors added USD1.2 billion during the month, the 10th month in the last 12 with positive investor sentiment.

Event driven funds are in the midst of significant redemption pressures, persisting since the end of 2014. In the 1.5-year span ending May 2016, investors removed USD45.1 billion from event driven strategies. The current streak of six consecutive monthly outflows (and 14 in the last 18) is by far the worst period for universe outside of the financial crisis.

Activist hedge funds reporting to eVestment, a subset of the event driven universe, saw slight net inflows of USD73 million in May, yet for the year have experienced aggregate redemptions near USD2 billion.

Negative sentiment toward funds investing in Asia continued into May, the sixth consecutive month during which investor sentiment has been negative.

Redemptions from China-focused funds reporting to eVestment were USD164.5 million in May, much less than the level seen in March, and slightly less than the redemptions in April. 

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