Investors removed an estimated USD7.13 billion from the global hedge fund industry in October, pushing year-to-date (YTD) flows firmly negative at -USD10.09 billion.
The October outflows follow an uninspiring year in hedge fund performance, culminating in October performance numbers that saw almost all primary hedge fund markets and strategies in the red for the month, as eVestment reported earlier in November.
Given that, historically, December has been a month where outflows are elevated even in otherwise positive years, it is highly likely that 2018 will end up as a year of net redemptions from the industry. Overall industry AUM now sits at approximately USD3.252 trillion.
Among hedge funds types, Commodity funds and Equity funds were just barely positive in October with investors adding USD540 million and USD160 million respectively. And Equity, Fixed Income/Credit and Commodities funds are all positive for asset flows for the year. Multi-Asset funds are where there’s some real bleeding, with investors pulling -USD6.85 billion from these funds in October, bringing YTD flows to -USD23.96 billion.
Among primary strategies, Relative Value Credit and Market Neutral Equity funds were big asset winners in October, at +USD2.68 billion and +USD2.35 billion, respectively. The positive flows were not enough to push Relative Value Credit funds into positive asset flow territory for the year – those funds are still down USD2.77 YTD. Market Neutral Equity funds, however, are strongly in the green for asset flows YTD at +USD13.32 billion.
Macro funds were the big asset losers in October, with flows at -USD3.94 billion for the month. These funds are still positive YTD, however, with flows at +USD7.81 billion so far in 2018. October marked the group’s second consecutive monthly outflow and largest monthly redemptions of the year. Performance has since improved, which may be a saving grace for the strategy as investors consider redemptions into year-end.
Managed Futures and Multi-Strategy funds both also saw big redemptions in October, at -USD3.22 billion and -USD2.58 billion respectively. Both of these strategies are deeply negative for the year as well, with both seeing redemptions of just over -USD13 billion for the year.
