Forty-two per cent of hedge fund managers were able to raise new capital in 2018, but those who saw redemptions and/or lost money were in the majority, and declared 2018 to be one of the most challenging years for the industry in a decade.
That’s according to December and Year-End 2018 eVestment Hedge Fund Asset Flow Report, which reveals that investors removed USD19.64 billion from the industry in December, bringing total 2018 investor redemptions to USD35.3 billion, the second highest investor redemptions since 2009, according to the new eVestment data. Performance-related asset declines of USD52.4 billion during the year, coupled with those investor redemptions, reduced total industry assets down some USD87.7 billion. The industry ended 2018 with about USD3.189 trillion AUM.
The year-end report highlights the importance of due diligence in the fund selection process. For instance, although overall figures for industry performance and flows are negative, those funds that did receive meaningful net inflows in 2018 outperformed the aggregate industry average by over 400 basis points.
According to the report, Market Neutral Equity funds were the big winner in asset flows for 2018, with investors adding +USD12.51 billion to these funds during the year, the most of any fund type for the year. Other asset winners for the year, among primary strategies, were MBS Strategies (+USD8.01 billion) and Macro funds (+USD6.74 billion).
For the month of December, almost all fund types and primary strategies had asset flows in the red, with Macro funds and Event Driven funds bucking the overall trend with investors adding USD3.44 billion and USD710 million, respectively, to these funds last month.
Multi-Asset funds were the biggest asset losers in 2018, with investor redemptions at USD38.5 billion.
Among primary hedge fund strategies, big asset losers for the full year 2018 were Managed Futures funds (-USD18.41 billion), Multi-Strategy funds (-USD17.93 billion) and Long/Short Equity funds (-USD13.69 billion).
